Abbotsford, British Columbia – Every other day, 28,000 liters of raw milk leaves Casey Pruihm’s farm in Abbotsford, Western Canada, and enters a distribution system built on the assumption that milk and the products made from it are going somewhere.
Most are consumed in Canada, but some was sold across the border to the United States.
Those sales have largely stopped since U.S. President Donald Trump’s 50% tariffs on $20 billion worth of Canadian products, including dairy products, went into effect on Aug. 22.
Pluim, who is also president of the British Columbia Dairy Association, which represents about 400 dairy farmers in the province, told Al Jazeera that Canadian farmers do not individually decide which products to export.
Instead, producers such as Pluim, a farm with 330 cows milked three times a day, sell milk to the state’s milk marketing system, which distributes milk to processors on demand, including for export to the United States.
If processors lose U.S. demand, they may need less milk, and the impact will be felt throughout the state.
“There remains considerable uncertainty about the impact of U.S. tariffs,” Dylan Krueger, director of communications for BC Dairy, told Al Jazeera.
He said it is too early to know how the industry will be affected or whether milk that is no longer sold to the U.S. can be sold in other countries to reduce economic losses.
But tariffs and broader trade tensions are already creating uncertainty and instability for businesses.
“If a processor that exports some of its product to the U.S. is unable to sell into that market because there’s a 50% tariff on that market, that’s what dairy farms are going to be affected by,” Plume said.
Pluim said if processor demand is squeezed, farmers will be forced to throw away milk. In the worst case scenario, the herd must be separated.
“Cows are not like faucets. You can’t just turn them on and off,” he said.
His warning captures dairy’s unique vulnerability in tariff wars. Milk is highly perishable, collected on tight schedules and dependent on processors whose demand can change much faster than farmers can adjust production.
“These tariffs are completely unjustified,” David Wiens, president of the Canadian Dairy Association, told Canada’s CBC News, adding that they would affect “the supply chain not only in Canada but in the United States.”
supply management system
Dairy trade between Canada and the United States has primarily operated under the Free Trade Agreement between the United States, Mexico, and Canada, known in Canada as CUSMA.
Canada manages the supply of dairy products, poultry, and eggs through a national agricultural policy known as supply management. This system uses import regulations, including production quotas and tariffs, to provide farmers with more stable and predictable prices while maintaining domestic supply.
Critics describe the system as a protectionist, government-backed cartel.
The U.S. government claims Canada’s supply management system restricts U.S. dairy exports. “Canada has been robbing America for years,” President Trump wrote on Truth Social, accusing the country of imposing “ridiculously high tariffs” that make life impossible for American farmers.
Canadian producers reject that argument, arguing that existing trade agreements already give virtually tariff-free access to U.S. imports, but are being underutilized.
According to the Canadian Dairy Processors Association, Canada’s dairy trade deficit with the United States has increased significantly since CUSMA came into effect on July 1, 2020.
In 2020, Canada exported C$241.3 million ($173 million) worth of dairy products to the United States and imported C$647.4 million ($462.7 million) worth of milk and dairy products. According to the association, in 2025, Canada’s dairy exports will increase to C$308.7 million ($220.7 million), while U.S. dairy imports will more than double to C$1.355 billion ($968.5 million), accounting for 13.8% of total U.S. dairy exports.
Brian Yu, chief economist at Central 1 Credit Union, said it could be difficult for Canadian producers to absorb the immediate shock of losing a major market because a replacement buyer cannot be found quickly.
“It will be painful in the short term for many producers,” Yu told Al Jazeera.
“It’s not really possible to adapt to a 50 per cent tariff right away because it’s uncharted territory for a lot of industries…and it’s going to end up locking out[Canadian producers]because there’s not a lot of margin for a lot of producers to play with,” he said.
Yu said Canadian consumers could absorb some of the additional supply and exporters could seek new markets or higher-value products, but neither adjustment would be immediate.
“There’s a global market as well. Especially when you’re talking about chilled, chilled beef, chilled products, it’s really about…are there other types of markets available?”
Canada has also imposed retaliatory tariffs, which went into effect on September 8 and target $20 billion worth of U.S. goods.
Dairy products are also included. The list includes 50% duties on milk, cream and whey products and 25% duties on many cheeses imported from the United States.
Canadian Prime Minister Mark Carney framed Ottawa’s response as both retaliation and an attempt to build greater economic resilience.
Announcing the latest breakdown in negotiations, Canada said it would match Washington’s new tariffs “dollar for dollar” to protect workers, farmers, families and businesses.
But retaliatory action comes with its own risks.
“While Canada’s new retaliatory tariffs will help some industries, they will hurt most industries and weaken the country’s overall economic growth by raising costs for producers and consumers,” Oxford Economics said in a report.
For now, geography remains important for perishable products like dairy products, which once moved quickly across the U.S. border and cannot be redirected overnight to distant markets without new buyers, logistics, or regulatory approval.
The Trade Commissioner in Ottawa is advising affected businesses to check their compliance with CUSMA, consider available remedies and contact the Trade Commissioner about potential new markets.
Yu predicted that the U.S. and Canada could reach a tariff agreement within months, but said the interim period could result in “higher prices, lower economic activity and deepening mistrust.”
For Pluim, the uncertainty is as precarious as the threat of tariffs itself.
“Like other Canadians, I think it’s unfortunate that trade negotiations have once again broken down and all that remains is the uncertainty surrounding it.”
