Your Milk Just Got More Expensive

President Trump's ban on Canadian dairy imports — set to take effect September 29 — is drawing sharp criticism from American farm groups who say the move will lower prices for U.S. producers while raising them for consumers.

Trump signed the proclamation Tuesday, citing Canada's dairy supply management system, which caps imports and sets domestic prices, as an unfair trade barrier. The ban covers all Canadian dairy products, along with Canadian alcohol and motorcycles.

Canada responded the same day, imposing a 50% tariff on American dairy ingredients including whey, casein and milk proteins, and a 25% tariff on U.S. cheeses.

The same Canadian system Trump cited as the problem is what insulates Canadian dairy farmers from the ban's effects, according to Tim Gibbons, executive director of the National Family Farm Coalition. 

"U.S. farmers are trapped in a failed free trade system that works against their best interests," Gibbons said. "Our government's continued insistence on weaponizing tariffs offers little benefit to U.S. dairy farmers and consumers alike, with limited impact to Canadian dairy farmers who are protected from volatile trade policy by their dairy supply management system."

Darin Von Ruden, president of the Wisconsin Farmers Union, said the disruption is likely to push farm-gate prices down while giving processors and distributors room to raise retail prices.

"Any time that you get a market disruption, it usually lowers the price to the farmer, but also gives the middleman, the multinational corporations, the ability to raise the price on consumers," Von Ruden said.

Wisconsin, the nation's top dairy state, has seen its number of dairy farms fall from roughly 43,000 in 1990 to just under 5,000 today. The ban adds to existing pressures including diesel fuel costs, which hit a national all-time high this week at nearly $6 per gallon.

A Familiar Pattern

Von Ruden said he worries dairy exports to Canada could follow the trajectory of American alcohol, which saw lasting market losses after Canadian provinces imposed boycotts. When Alberta and Saskatchewan lifted their boycotts earlier this year, Canadian retailers still ordered 65% less U.S. wine than before the trade dispute began.

Wendong Zhang, an associate professor of economics at Cornell University, described that drop as a "permanent erosion" of market share — what can happen when consumers shift to domestic alternatives and don't return.

"Our markets are being destroyed," Von Ruden said.