A fight over a little-known dairy product sits at the center of increasing tensions between the U.S. and Canada over broader trade issues.
If the dispute goes unresolved, some observers say, it could have ripple effects in global dairy markets. It also could contribute to efforts by some, including advisers within the Trump administration, to dramatically reshape the North American Free Trade Agreement, which some experts warn could be a disaster for U.S. farmers.
Here’s what is happening. U.S. dairy farmers and processors in Wisconsin, New York and Minnesota have been hurt by a newly adopted Canadian pricing policy that encourages Canadian dairies to buy certain types of milk products domestically. The specific product in the trade dispute is a milk-protein concentrate called ultrafiltered milk that is used primarily in cheese-making to increase yields.
In 2016, the U.S. exported $102 million in ultrafiltered milk to Canada, according to the U.S. Agriculture Department. But industry observers estimate that exports have dropped to near zero since February, when Canada created a nationwide dairy classification that lowered the price of Canadian milk used to make ultrafiltered milk.
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