Editor's note: This story has been updated to reflect the preliminary duties imposed on softwood lumber by the United States.
Looks like we have to slightly change the boy who cried "wolf" to the boy who cried "moo" for the moment. Donald Trump took some time last week to complain about Canada dairy practices to Wisconsin dairy farmers.
The primary battle stems from ultra-filtered milk (think Fairlife) a concentrated ingredient designed to increase protein in cheese and yogurt. The U.S. is flooding Canada with ultra-filtered milk since, unlike other U.S. dairy products, isn't subject to as much as a 300% tariff.
The Canadian dairy producers were losing money on the cheaper milk product and introduced a policy giving incentives to Canadian processors to buy domestic milk.
Part of the anguish on the U.S. side is that the U.S. has been overproducing milk and the sudden change leaves them high and not so dry.
What's Tempting: Fairlife as a milk alternative (BalanceofFood.com)
The idea behind free trade agreements is that trade disputes would be lessened if not eliminated since rules would be clear and easy. Ultra-filtered milk is a good example. This sneaked through because no one thought about ultra-filtered milk when NAFTA was signed almost 25 years ago.
The Trudeau Government, given the formidable task of dealing with Donald Trump, has chosen a cool, non-confrontational approach. This strategy has worked fairly well, given Trump's lack of attention span.
Sure, Trump postured and yelled last week in Wisconsin. But what happens next week? Or the week after? He has not shown the ability to dig in for the long haul on any project. The "wait it out" strategy by the Trudeau Government may work in the moment.
The reality is that the Canadian dairy industry is protectionist, not just on this issue. I can tell you that in the cheap grocery store in Windsor last fall, the price of milk was high enough that, even with the exchange rate, would shock most Americans.
The dairy industry was a dividing point when the Harper Government was negotiating the Trans Pacific Partnership (TPP). Dairy was also a concern with the free trade agreement between Canada and the European Union.
U.S. milk gets subsidized by ultra-cheap GMO corn that is fed to cows, defying nature since cows are supposed to eat grass.
Trump loves to talk about trade being "one-sided," but like most "things" he talks about, they are more complex than he says.
As upset as Wisconsin and New York dairy farmers are about the changes, they may not realize they are likely trade pawns on another key trade issue between the United States and Canada: softwood lumber. As we've seen with softwood lumber, these trade disputes can go on and on and on.
The U.S. Commerce Department is scheduled to announce today whether it will impose duties on Canadian softwood lumber. The preliminary duties are as much as 24%. The 2 countries had a year-long extension deadline on a softwood lumber deal that expired October 12, 2016.
The second round, devoted to alleged anti-dumping duties, won't happen until June 23 at the request of the U.S. Lumber Coalition.
To catch you up on the softwood lumber issue, the U.S. has claimed that Canada subsidizes its softwood lumber industry because most of the lumber comes from Crown lands.
As we learned from Brian Williams after the Justin Trudeau visit to the White House, softwood lumber won't get mentioned until someone mentions it.
The idea of a dairy-softwood negotiation isn't new in a lot of ways. The drawback for Canada is having to concede something that the country says isn't protective without addressing concerns over U.S. protections. A dairy-softwood deal has the possibility of giving more than Trump wants in a deal, an ill-advised strategy. The softwood lumber industry would also suffer since the political power in Canada lies in dairy country (Ontario and Quebec) more than the land of softwood lumber (British Columbia). With the B.C. provincial election coming up on May 9, both the Liberals and the NDP will be loud on Ottawa not to undercut a key industry in the province.
Trump likes to position himself as a tough negotiator but he will have very little power in the minutia that goes into trade deals. And he isn't going to Washington state to talk about the "unfair" practices of softwood lumber. He does know how to talk and tweet, even if he often has no clue what he is saying.
If there is a concession to be made, even a small one by Canada, Trump may claim victory. But there are 2 sides to a trade deal. If Canada gives up something on softwood lumber in exchange for more stability. dairy and some other industry may get a boost.
The United States and Canada should have better trade relations on dairy, softwood lumber, and a host of other border issues. The countries should do better on letting citizens work in each other's country. If concessions on dairy and softwood can lead to a better understanding, that would be for the best.
Don't think for a second that Trump has any interest in a fair deal. He thinks life is like a reality show and conducts business with that mentality. Ask the coal miners in Kentucky and West Virginia what they think of his promises. The Wisconsin and New York dairy farmers might be wondering the same thing not too long into the future.
Giving advice to Donald Trump feels like a useless task but will do so anyway. Pick a strong, knowledgeable U.S. ambassador to Canada nominee. We've heard the name Kelly Knight Craft some time ago. From what little we know about Craft, she would not hit that mark.
Also, make a trip to Canada. Ottawa is the logical choice, but if you want dressing and gravy on your fries in St. John's or a golf trip to Victoria, BC, give that a try. Canada may not like you, but you should give Canada a chance if you want good trade negotiations.
photo credit: twitter/@realdonaldtrump; Fairlife/Coca-Cola