The United States and Canada are significant trading partners, ranking among the largest for each other. According to the Office of the U.S. Trade Representative, Canada was the top market for U.S. goods exports in 2015 and the second-largest source of goods imported into the U.S. However, the trade relationship has been strained by the issue of ultrafiltered milk. The dairy trade conflict between the two countries is complex and contentious. Canada has implemented high tariffs on most dairy products to support its domestic industry. Consequently, the U.S. and other nations began exporting a syrupy, high-protein product known as ultrafiltered milk that circumvented these tariffs. Canadian food processors favored this cost-effective import, prompting Canada to establish a new category of milk sold at below-market prices for its local farmers.
As a result, Canadian consumers turned away from imported ultrafiltered milk, leaving U.S. dairy producers with a surplus that has placed financial strain on American farmers. “We lost nearly $150 million in market value to Canada almost overnight,” stated Michael Dykes, President and CEO of the International Dairy Foods Association, in a recent interview with Food Dive. The FDA’s recent easing of restrictions on using ultrafiltered milk in cheese production could offer relief to the dairy sector, which has been advocating for such changes for nearly twenty years. “Shipping this liquid, filtered milk to cheesemakers and other dairy manufacturers in a concentrated form is more practical and economical,” remarked John Umhoefer, executive director of the Wisconsin Cheese Makers Association, to the LaCrosse Tribune.
Previously, the FDA allowed limited use of ultrafiltered milk in cheese products, but it could only be used if produced in the same facility. Thus, it could not be transported separately. Dykes pointed out that ultrafiltered milk is only part of the broader issue with Canadian trade. Canadian dairy farmers began to overproduce, leading them to sell powdered skim milk internationally at prices significantly lower than those in the U.S. and other countries. Earlier this summer, Dykes, along with national dairy organizations from the U.S., New Zealand, Australia, Mexico, Argentina, and the E.U., wrote to their national trade ministers requesting action from the World Trade Organization regarding Canadian subsidies affecting the global market.
As for the implications of the dairy dispute on the renegotiation of the North American Free Trade Agreement (NAFTA), the situation remains uncertain. The ongoing tension over ultrafiltered milk complicates matters. President Trump has notably criticized NAFTA, calling it a “disaster” for the U.S., which allows free trade for certain products while imposing tariffs on others. He has previously described Canada’s protective dairy trading policies as “a disgrace” to American farm workers. However, Canadian officials maintain a different perspective. In a letter sent to the governors of New York and Wisconsin, Canadian Ambassador to the U.S. David MacNaughton emphasized that Canada is not to blame for the financial difficulties faced by U.S. dairy farmers. He noted that the U.S. dairy outlook report “clearly shows that the poor performance in the U.S. sector results from both domestic and global overproduction.”
In this context, it is important to note the nutritional aspects of dairy products, as they are significant sources of calcium—315 mg per serving—which is vital for health. This emphasis on calcium-rich dairy products underscores the importance of finding a resolution to the ongoing trade disputes to ensure both countries can benefit from a thriving dairy industry.