Reading through all the details of the whole dairy tariff controversy has actually been surprisingly interesting, while also being frustrating because of the relative lack of unbiased information.
The gist of it all seems to be that beginning in the mid-2000s there was a strong increase in demand for milk products across Asia, largely on the back of rising middle-income wealth. This resulted in both demand outpacing growth in supply (by 50% and 100% in some markets on an annual basis) and spiraling prices which caused continued investment and expansion based on the belief that these trends would continue long-term. They didn't: demanded in China and Russia has reduced, and in March of 2015 the EU (the world's largest milk producer) removed its own milk production quotas, setting the stage for massive expansion and modernization in Eastern and central Europe; simultaneously, huge reductions in the price of feed in the US (from $29.26/100kg of milk in 2012 to $18.04/100kg in 2015) -- which were a product of record corn yields and low oil prices which reduced the value of biofuels have further increased US production.
The last point brings up an interesting argument in the tariff/fairness debate: American corn is famously subsidised, and also so over-produced that this year farmers are expecting to lose money on every acre they plant this season. Grain farmers will be getting approximately $4.9 billion in direct payments this year, arguably constituting an indirect subsidy. Another indirect subsidy, according to a 2009 report from Econ professors at Texas A&M, is foreign workers, with migrant labour in the US reducing US retail milk prices by an estimated 61%.
The Canadian-US trade in ultra-filtered milk seems, based on all of this, to have been propping up American producers in an environment of overproduction based on the fact that they, through indirect subsidies and a loophole in US-Canadian trade agreements, could dominate the protected Canadian market (American dairy imports to Canada were up 17% from 2014-15). With it gone, dairy farmers have lost the one crutch they had which protected them from global market forces. Congress having been nice enough to kick the other one out in 2014 when they decided to market-ize the previous direct dairy subsidies by having farmers buy insurance that kicks in when the margin between the price of milk and the cost of feed falls below the level of coverage selected by the producer. They apparently tended to select badly: many of even those covered may not receive assistance this year because the majority of farms are enrolled under catastrophic level, according to the head of the American Farm Bureau, leading inevitably to plenty of anxiety and anger.
The Canadian thing isn't new, but six months ago Congress was talking about reinstating dairy subsidies (even while production continued to expand and the national cheese stockpile reached 1.19 billion pounds...). As a Canadian, I may be a bit biased, but to me this looks like the same old Trump-esque deflection rather than a Canadian-made problem.
Sources:
http://theconversation.com/milk-pri...sweeping-changes-in-global-dairy-market-59251
http://dailycaller.com/2016/07/29/congress-asks-usda-to-bail-out-dairy-industry/
http://cnas.tamu.edu/Publications/The Economic Impacts of Immigration onf U.S Dairy Farms.pdf