IDFA urges US action on EU carbon rules and Canadian dairy pricing
In its comments to the Office of the US Trade Representative (USTR), IDFA focused on possible changes to the European Union’s Carbon Border Adjustment Mechanism (CBAM). The mechanism places carbon-related charges on selected imports whose production is carbon-intensive. Dairy products fall outside both its current scope and proposed coverage, but the association warned that extending the mechanism could expose American processors to indirect costs through the equipment they purchase.
IDFA said US dairy manufacturers rely on European suppliers for specialised processing machinery, with limited alternative sources for some operations. It warned that higher CBAM-related costs for steel, aluminium and other materials used by those suppliers could be passed through to American customers. According to the association, this could increase spending on machinery purchases, maintenance and upgrades, with implications for investment in processing facilities. Becky Rasdall Vargas, IDFA’s senior vice-president responsible for trade and workforce, urged policymakers to consider the broader effects on manufacturing expenses and supply chains.
The association asked USTR to resist bringing downstream products within CBAM and to preserve exemptions for food and agricultural goods. It also sought clearer rules and safeguards under the EU’s inward-processing provisions, aimed at preventing carbon-related expenses from reaching US businesses through cross-border supply chains. In its submissions, IDFA also identified the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) as a regulation that could affect American dairy companies’ ability to compete.
A separate filing to the US International Trade Commission (USITC) concerned Section 338 of the 1930 Tariff Act, codified as 19 U.S.C. 1338. The provision authorises the president to levy duties as high as 50% on imports from countries found to have discriminated against American commerce. USITC had invited comments on the criteria and procedures for identifying and assessing foreign practices considered discriminatory or unreasonable when applying that authority. IDFA cited Canada’s dairy pricing arrangements as an example of a policy that could put US producers at a disadvantage.
According to IDFA, Canada’s milk-class system sets prices for some milk proteins and nonfat milk solids below production costs. The association said those arrangements can reduce the competitiveness of otherwise commercially viable dairy imports from the United States in the Canadian market. It linked these pricing practices to difficulties faced by American manufacturers seeking additional overseas sales. Its submission called for scrutiny of foreign pricing mechanisms alongside regulations that could impose financial and operational burdens on processors and exporters.
IDFA asked USITC to make its assessment procedures clear and transparent, with safeguards for sensitive commercial information and consistent standards grounded in evidence. It said proposed trade remedies should be focused on the practices identified and proportionate to them. Rasdall Vargas acknowledged the administration’s efforts to support American manufacturing through existing trade powers, while stressing the need for a predictable regulatory framework in which dairy businesses can make investment plans, organise supply chains and compete in overseas markets.
