USMCA Expands Dairy Trade Despite Canadian Barriers

For decades, Canada has maintained strict controls on dairy imports to support its supply management system. Under NAFTA, dairy was largely off-limits. The USMCA opened limited access, granting U.S. farmers 3.5% of Canada’s dairy market. However, US dairy groups argued that Canada unfairly restricted imports through its quota allocation process.

A USMCA dispute panel ruled in 2022 that Canada’s practices were restrictive, prompting some policy adjustments. However, a 2023 ruling sided with Canada, allowing it to continue regulating access. This led U.S. officials to criticize Canada’s approach, with lawmakers stating, “Canada’s unwillingness to provide fair market access harms U.S. dairy producers and processors.”

Despite these conflicts, research confirms that US dairy exports to Canada have grown since the USMCA. “Forty-three percent of U.S. dairy exports, by value, go to Canada or Mexico,” said researcher Christopher Wolf. Canada primarily imports high-value products like butter and cream, while Mexico remains a top buyer of U.S. cheese.

While the USMCA improved market access, the study suggests that trade tensions will likely continue. Understanding quota regulations and ensuring fair trade practices remain key concerns for U.S. dairy exporters.