U.S. dairy producers insist they don’t seem to be searching for Canada to dismantle its provide administration system, however they do need Canada to observe the letter and spirit of the present deal that governs the dairy commerce between the 2 international locations.
U.S. President Donald Trump has repeatedly blasted Canada as “unfair” and “ripping us off” with huge dairy tariffs, in a approach that is not absolutely correct.
Nonetheless, senior figures within the U.S. dairy business are involved there’s additionally some misrepresentation occurring north of the border, making a false notion of what U.S. producers are literally searching for when it comes to entry to the Canadian market.
Shawna Morris, government vice-president for commerce coverage and international affairs with the Nationwide Milk Producers Federation and the U.S. Dairy Export Council, says it is not true that her business desires Canada to desert its system for safeguarding the dairy sector.
“We have by no means been out to remove Canada’s provide administration,” mentioned Morris in an interview from her workplace in Arlington, Va., simply outdoors Washington.
“It is a lot simpler to create a boogeyman and fear-mongering round that being the aim of the People, however that is actually not what our business has advocated.”
Becky Rasdall Vargas, senior vice-president of commerce and workforce coverage on the Worldwide Dairy Meals Affiliation foyer group, says she acknowledges the Trump administration has been “pretty abrasive” in its tone towards Canada.
“However on the similar time, I feel we really feel fairly ignored by Canada when it comes to our official commerce issues.”
Two most important commerce irritants
In keeping with Morris and Rasdall Vargas, the U.S. business has two most important irritants with Canada: how the Canadian authorities allocates the present quotas for tariff-free imports of dairy merchandise, and the way Canadian milk producers dump low cost milk protein into the worldwide market.
The import quotas negotiated below the Canada-U.S.-Mexico Settlement (CUSMA, which People name USMCA) are designed to present U.S. producers tariff-free entry value roughly 3.5 per cent of Canada’s home demand for dairy merchandise.
“Three per cent is fairly restricted,” mentioned Morris. “It is actually not a scenario the place our business is gonna are available in and take over the Canadian dairy market.”
CUSMA units import quotas for 14 classes of dairy merchandise. That enables an annual quantity of every class to enter Canada tariff-free, and any imports exceeding the quota would get hit with sky-high tariffs of 200 per cent or extra.
Canada’s rationale for that is making certain the home dairy business thrives by successfully capping how a lot the U.S. can export every year, stopping cheaper American merchandise from dominating the market. The U.S. authorities helps its dairy sector with hefty direct subsidies.
The U.S. dairy business says it is not asking for Canada’s quotas to be elevated or the tariff charges to be decreased. Quite, it desires adjustments to how Ottawa allocates the quotas: extra particularly, who will get them.
Massive Canadian dairies dominate import quotas
A lot of the quota quantity is allotted to main Canadian-owned dairy processing firms resembling Saputo and Agropur. Trade analysts on either side of the border say such firms have little incentive to import U.S. merchandise that may compete with their very own.
In keeping with the U.S. producers, this restricts their entry to the Canadian market.
Their proof for that declare: Canadian commerce statistics displaying tariff-free imports from the U.S. have virtually by no means reached the quota limits in any class.
President Donald Trump says Canada has been ripping off the USA, imposing tariffs of as much as 400 per cent on imported American dairy merchandise. Andrew Chang breaks down Trump’s claims, explaining how dairy tariffs work and the way probably it’s that anybody is definitely paying such sky-high costs.
Photographs equipped by Reuters, Getty Photographs and The Canadian Press. Extra credit (Credit score: 9:17 Skotidakis/Fb), (Credit score: 9:21 Elite Dairy).
“For 5 years, Canada’s been enjoying video games with these tariff fee quotas,” mentioned Morris. “That is a number of quantity that ought to have been in a position to attain Canadian customers.”
Regardless of these complaints, Canada’s imports of U.S. dairy merchandise have risen considerably because the CUSMA quotas took impact in 2020. These imports totalled $897 million in 2024, based on Statistics Canada knowledge, greater than 4 instances the worth of imports in any yr earlier than 2020.
“Commerce actually needs to be far greater than it’s,” mentioned Morris. “That was what USMCA promised to ship and fairly frankly has fallen far quick.”
A key change the U.S. producers wish to see is for Canada to grant retailers and the food-service sector a share of the tariff-free quotas, permitting them to import some U.S. dairy merchandise instantly.
The U.S. business additionally desires Canada to be far stricter in taking away allocations from importers that fail to make use of their full quota in a given yr.
Whereas a invoice that Parliament handed in June bars Ottawa from agreeing to lift the dairy import quotas or decrease the tariffs, it would not forestall different adjustments to the system, leaving Canadian commerce negotiators some wiggle room.
Donald Trump shouldn’t be a fan of Canada’s dairy provide administration system — repeatedly attacking it in his first time period and going after it once more as he prepares to return to the White Home. CBC’s Ellen Mauro meets involved Canadian dairy farmers and explains why the system has the U.S. president-elect so riled up.
‘An inherent mismatch’
The opposite chief criticism from the U.S. focuses on Canada’s low cost exports of milk proteins, additionally described as milk solids, resembling skim milk powder.
The People argue that as a result of Canada’s provide administration system retains home costs artificially excessive, Canada can promote its extra manufacturing of milk proteins internationally at artificially low costs, undercutting the competitors.
“It frankly is senseless that you may have one of many highest milk costs on the planet and but be exporting dairy protein at a few of the lowest costs globally,” mentioned Morris. “That is simply an inherent mismatch.”
Canada’s pricing of milk solids for the export market is at the moment the topic of a U.S. Worldwide Commerce Fee investigation, ordered by the Trump administration, with a listening to scheduled for Monday.
Dairy Farmers of Canada declined a request for touch upon the case. “Throughout the current election, all main events expressed assist for provide administration and said that it could be off the desk in upcoming commerce negotiations,” the group mentioned in a information launch in June.
The Trump administration shouldn’t be the primary to accuse Canada of breaching CUSMA phrases on dairy.
Joe Biden’s administration twice took authorized motion over Canada’s dealing with of the dairy quotas, claiming it was unfairly undermining U.S. entry to the Canadian market.
The U.S. received the primary dispute, which it launched in 2021, however failed to win the second, in 2023.
Now in 2025, Rasdall Vargas says her business desires Canada to be prepared to listen to its true issues and do one thing about them.
“Finally, when we now have a buying and selling companion who is not taking our issues significantly till they’re threatened to take action, it is also not a very good feeling from our facet,” she mentioned.
No matter anybody thinks about Trump’s bluster on Canadian dairy, Rasdall Vargas believes it is having an impression.
“I feel that is the president’s approach of getting our again, in all probability extra abrasively than Canada would love,” she mentioned.
“I’ll say I’ve by no means seen Canadian dairy pursuits take U.S. issues about Canadian dairy coverage extra significantly than previously six months.”
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