Standing Up for U.S. Dairy: Why the President’s Action Against Canada Is Long Overdue
For generations, women have been vital to America’s dairy industry, managing farms, caring for animals, raising families, and supporting rural communities. At Ag Women Connect, we have members with deep roots in dairy. Their family success depends not just on farm work but also on the fair treatment of American agricultural products in international markets.
On July 20, 2026, President Donald J. Trump issued a proclamation imposing additional duties on certain Canadian products, applying a 50 percent tariff starting August 19, 2026, to offset Canada’s unfair dairy market practices. AG Women Connect supports this move to defend American dairy farmers and seek fair market access.
A Historical View – Canada Has Protected Its Dairy Market for Decades
It is very important to understand that the struggle over dairy is not something new. This is part of a long-standing trade dispute. Canada established its dairy supply-management system in the 1970s, controlling domestic production with quotas, setting regulated prices, and restricting imports to protect the market. While largely shielded under NAFTA and WTO rules, Canada requires high tariffs on over-quota imports, thereby claiming market access while managing them to hinder U.S. dairy sales.
Canadian Policies Have Directly Harmed U.S. Dairy Farmers
One of the clearest examples came with Canada’s Class 7 milk-pricing system, introduced nationally in 2017. Class 7 allowed Canadian processors to obtain certain milk proteins at artificially low prices. This displaced U.S. ultrafiltered milk that had previously been sold to Canadian cheese and yogurt manufacturers and helped Canada move surplus dairy proteins into international markets.
The economic effect was swift. According to the Congressional Research Service, U.S. ultrafiltered milk exports to Canada reached nearly $107 million in 2015. They dropped from approximately $102 million in 2016 to $49 million in 2017 and $32 million in 2018 after Class 7 was implemented. During the same period, Canadian skim milk powder exports more than tripled, increasing from approximately $42 million in 2016 to $133 million in 2017.
That was not simply a disagreement over competing agricultural policies. Canada’s pricing structure displaced American products from a nearby market while helping Canadian dairy ingredients compete against U.S. products elsewhere in the world. The United States challenged earlier versions of Canada’s dairy export policies before the World Trade Organization as far back as the 1990s. A WTO ruling ultimately determined that Canada’s special milk-class practices constituted prohibited export subsidies, leading to changes in the Canadian system. Nevertheless, disputes over Canadian pricing, exports and import restrictions continued.
Canada Treats European Cheese More Favorably
The President’s 2026 proclamation addresses an additional inequity: Canada does not administer comparable cheese quotas equally for the United States and the European Union. Canada maintains one cheese TRQ under USMCA and another under its Comprehensive Economic and Trade Agreement with the European Union, known as CETA. Under Canada’s allocation rules, retailers may receive and use quota for qualifying European cheese under CETA. Retailers are not afforded the same opportunity under the comparable USMCA cheese quota.
The proclamation states European cheese gets better treatment than similar American cheese. Canada’s policy blocks U.S. market access, leading to lost sales, revenue, and hurting American dairy producers, exporters, workers, and businesses. This distinction is important. The United States is not asking Canada to give American dairy products an advantage over European products. It is asking Canada to stop treating U.S. cheese less favorably than comparable European cheese. A trade agreement cannot fulfill its purpose when one trading partner designs administrative rules that make negotiated access harder to use.
USMCA Was Supposed to Create New Opportunities
The USMCA replaced NAFTA in 2020, focusing on dairy trade. Canada agreed to end Class 7 pricing, impose export limits on certain dairy proteins, and expand duty-free US exports through new tariff-rate quotas for products like milk and cheese. While not drastically changing Canada’s supply-management system, it opened about 3.6% of the dairy market to U.S. farmers, a small but significant share given Canada’s status as a key export market. The success depended on Canada managing quotas properly, which has not happened.
Canada Has Restricted the Market Access It Promised
Canada has allocated most of its USMCA dairy quota to Canadian processors, who may compete with U.S. suppliers and lack incentives to import American dairy products. It has also limited participation by retailers, restaurants, and other potential importers interested in U.S. products. The National Milk Producers Federation and U.S. Dairy Export Council say this setup has led to underfilled quotas and blocked American exporters from the market access USMCA aimed to provide. NMPF estimates U.S. exporters missed over 15,000 metric tons of bulk cheese sales in a five-year period.
USMCA Panel Rulings
Two USMCA panels reviewed the dispute. In January 2022, a panel sided with the U.S., ruling Canada’s quota practices violated the agreement. Canada revised policies, but the U.S. argued access remained limited. A second panel in November 2023 delivered a complicated ruling. The panel largely accepted Canada’s revised approach, or that the measures violated USMCA provisions, but did not find it fair to U.S. producers. U.S. dairy groups criticized the ruling and called for reforms.
The Dairy Farmers of America Supports Stronger Enforcement
Concern over Canada’s dairy policies concerns the American dairy industry. In June 2026, Michael Lichte from Dairy Farmers of America testified before the House Agriculture Committee about the importance of USMCA and stronger enforcement. He said export demand, about 17% of U.S. milk, is key for growth. Lichte called USMCA a crucial trade deal affecting dairy competitiveness, investment, and farm stability. He also raised concerns about Canada’s TRQ administration and efforts to bypass export limits.
Canada’s Dairy Protein Practices Remain a Concern
Quota administration isn’t the only unresolved issue. USMCA created export rules for Canadian skim milk powder, milk protein concentrate, and infant formula, aimed at preventing Canada from using its controlled domestic pricing to flood markets with surplus dairy proteins at artificially low prices.
The National Milk Producers Federation and U.S. Dairy Export Council say Canada has tried to bypass those rules by changing tariff classifications. They warn this allows Canada to continue dumping dairy proteins in ways that distort markets and pressure U.S. products downward. For dairy farmers, these international price impacts lead to reduced exports, displaced ingredients, and low-priced imports that lower U.S. milk demand and farmers’ prices.
Fair Trade Requires Accountability
Tariffs can carry risks, including higher costs, supply-chain disruptions and possible retaliation. Those concerns deserve attention. However, failing to respond to discrimination also has costs. U.S. dairy farmers lose sales, processors lose opportunities, rural communities lose investment, and the credibility of American trade agreements is weakened.
Why the President’s Proclamation Matters
The proclamation explains that lost export opportunities suppress American agricultural production and investment and can undermine employment and economic activity in rural communities. It also states that the duties may encourage Canada to remove the discriminatory treatment of U.S. cheese.
The President issued a proclamation under Section 338 of the Tariff Act of 1930, which authorizes additional duties when another country discriminates against U.S. commerce or imposes unreasonable restrictions. The proclamation finds Canada’s different treatment of U.S. and European cheese meets that standard, imposing a 50 percent duty on specified Canadian products starting August 19, 2026.
Tariffs aren’t a substitute for access to the Canadian dairy market. Their purpose is to create consequences for continued discrimination and strengthen negotiation leverage. Despite years of talks, commitments, trade challenges, and a favorable panel ruling, key barriers persist. Without enforceable consequences, Canada has little motivation to change a system that benefits its domestic dairy sector. The proclamation emphasizes that access promised to U.S. producers must be meaningful and that American products shouldn’t be treated worse than those from other partners. American dairy producers seek the market access their country negotiated and equal treatment, not special privileges.
AG Women Connect supports women, families, and rural businesses vital to American dairy. The President’s proclamation emphasizes that trade agreements should provide fair, measurable, and enforceable opportunities for those whose livelihoods depend on them.
The most productive outcome would be for Canada to negotiate in good faith, provide equitable access to its cheese quotas and reform its dairy TRQ administration before the tariffs take effect or as part of the broader USMCA review.
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