U.S. dairy producers are blasting Colombia’s intention to impose tariffs on U.S. milk powder exports. On Aug. 12, the U.S. Dairy Export Council and the National Milk Producer’s Federation issued a joint statement urging federal officials to “leverage all available tools” should Colombia follow through with its plan.

This followed a joint letter the two groups penned three days earlier to Agriculture Secretary Tom Vilsack and U.S. Trade Representative Katherine Tai.

In their letter, the groups note dairy producers shipped more than $8.1 billion in goods overseas last year. That represents around 17% of total U.S. milk production. More than $2 billion of those exports were milk powder.

“Looking forward, emerging markets, such as those in Latin America, will be critical to maintaining a vibrant U.S. dairy industry,” the letter says. “Unfortunately, protectionist interests have grown in the region, highlighted by the Colombian government’s decision to initiate this investigation.”

Why is Colombia acting now?

Accusations of U.S. imports harming local producers are not new. In 2021, a group of Colombian producers called for an investigation into what they perceived to be unfair practices by the United States. The Colombian Ministry of Commerce ultimately determined American goods were not harmful or detrimental to Colombian producers.

Things are different this time around. After years of conservative rule, Colombia elected its first left-leaning president in 2022. Gustavo Petro, a former Bogota mayor and one-time guerrilla fighter, vowed to reduce inequality in Colombia.

The country has one of the world’s highest rates of wealth inequality.

So far, Petro has been unable to pass many of his ambitions policy proposals. This coupled with a struggling economy has caused his popularity to plummet. Jaime Castanda, NMPF and USDEC executive vice president for policy and strategy, says the tariffs are a blatant attempt by Petro to boost image.

“The new leftist government in Colombia actually has very little popularity, so he’s desperately trying to do anything to gain some votes,” Castanda says.

While producers initiated the 2021 investigation of U.S. imports, Petro’s government is leading this one itself. Overseeing the case will be a new Ministry of Commerce appointed by Petro’s governing coalition.

Colombian officials allege U.S. milk powder is subsidized. They contend countervailing tariffs are needed to protect local producers. In their case document, the government cites everything from Covid-19 relief payments to the Dairy Margin Coverage Program as evidence of unfair subsidies.

Of course, the DMC program was in place when the U.S. and Colombia ratified their free trade agreement. However, Petro has previously stated a desire to change trade treaties he considers unfair.

According to Castanda, it appears Colombian officials went to public websites and pulled information on every farm program imaginable.

“They didn’t do any valid or credible analysis,” Castanada says. “We talked to the Department of Commerce and the International Trade Commission – they say they would never accept a case like that if someone brought it to them because it has no validity.”

What comes next?

Members of the Congressional Ag Trade Caucus are also joining the fight. On Aug. 9, Reps. Jim Costa, D- Calif., Adrian Smith, R- Neb., Jimmy Panetta, D- Calif., and Dusty Johnson, R- S.D., sent a letter to Colombia Ambassador Luis Gilberto Murillo. The four congressmen say they have deep concerns regarding Colombia’s decision to initiate a subsidies and countervailing measure investigation into U.S. powdered milk exports.

“The allegations made in the Ministry’s investigation lack sound legal basis, and we are aware of no evidence of a causal link between U.S. powdered milk exports to Colombia and any injury to the domestic industry,” the Ag Caucus leaders say.

U.S. officials have until Aug. 21 to submit a formal response to the Colombian allegations. The Colombian government then has 30 days to issue a preliminary investigation result. At that point, Colombia could impose higher tariffs or seek additional information.

Colombia is expected to take at least another year to complete its full investigation. If the government determines U.S. subsidies hurt Colombian farmers, it could impose import tariffs for up to five years.