The new trade agreement between the United States, Mexico and Canada will not help U.S. dairy farmers too much, the Chicago Federal Reserve Bank said in a report on Wednesday.
In the report, known as the "Beige Book", the Federal Reserve Bank of Chicago said that its contacts viewed gains from the renegotiation of North American Free Trade Agreement (NAFTA) as "too small and too far in the future to help dairy farmers".
The Chicago Fed overlooks the midwest region of the United States, a major dairy producing region in the country.
The Federal Reserve Bank of Minneapolis also noted that "a substantial number of dairy operations have exited the business" since the beginning of the year.
Earlier this year, Washington imposed additional tariffs on steel and aluminum products from Canada and Mexico, and the two countries responded by imposing tariffs on U.S. dairy and other agricultural products.
U.S. President Donald Trump asked Canada to give greater access to U.S. dairy farmers during the renegotiation of NAFTA, hoping to win the support among the farmers and workers in the midwest.
Canada agreed to drop import restrictions on U.S. dairy products at the end of September, allowing U.S. producers to supply up to 3.6 percent of Canada's dairy market. This new agreement is still waiting for the approval of Congress.
Meanwhile, the U.S. government purchased some domestic dairy products to compensate farmers' losses from higher foreign tariffs, according to the Chicago Fed.
"Even so, dairy farmers continued to struggle," the Chicago Fed wrote in the report.
