The United States and Canada rank among each other’s top trading partners. According to the Office of the U.S. Trade Representative, Canada was the largest market for U.S. goods exports in 2015 and also the second-largest source of goods imported into the U.S. However, the issue surrounding ultrafiltered milk has soured some of that amicable trade relationship. The dairy dispute between the U.S. and Canada is complex and contentious. Canada imposes high tariffs on most dairy products to bolster its domestic dairy industry. In response, the U.S. and other nations began exporting a syrupy, processed, high-protein product known as ultrafiltered milk, which managed to evade these tariffs. Canadian food processors favored this cheaper import, prompting Canada to introduce a new category of milk at a lower market price that its farmers could sell to producers. Consequently, Canadian consumers reduced their purchases of imported ultrafiltered milk, leading to a surplus for U.S. dairy producers and financial strain on American farmers. As a result, U.S. dairy exports have declined. “We lost $150 million in market value to Canada almost overnight,” said 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 the use of ultrafiltered milk in cheese production may assist the dairy industry, which has sought this change for nearly two decades, in overcoming these challenges. “Shipping this liquid, filtered milk to cheesemakers and other dairy manufacturers in a concentrated form is more practical and economical,” commented John Umhoefer, executive director of the Wisconsin Cheese Makers Association, in an interview with the LaCrosse Tribune. Previously, the FDA permitted limited use of ultrafiltered milk in cheese products but required that the ultrafiltered product be produced in the same facility as the cheese, preventing its shipment from other locations.
Additionally, Dykes noted that ultrafiltered milk is just one aspect of the broader trade issues with Canada. Canadian dairy farmers have also increased production, resulting in an oversupply that has led them to sell powdered skim milk on the international market at prices far lower than those of the U.S. and other countries. Earlier this summer, Dykes and other dairy associations from the U.S., New Zealand, Australia, Mexico, Argentina, and the EU sent letters to their national trade ministers urging them to petition the World Trade Organization regarding Canadian cross-subsidization in the global market.
As for the implications of the dairy dispute on the renegotiation of the North American Free Trade Agreement, the outcome remains uncertain. Nonetheless, the friction between the U.S. and Canada over ultrafiltered milk is not conducive to progress. President Trump has vocally criticized NAFTA, labeling it a “disaster for our country” for permitting free trade on some items while imposing tariffs on others. He has previously described Canada’s protectionist dairy policies as “a disgrace” to American farm workers. However, Canadian leaders view the situation differently. In a letter to the governors of New York and Wisconsin earlier this year, Canadian Ambassador to the U.S. David MacNaughton stated that Canada should not be held accountable for the financial difficulties faced by American dairy farmers, pointing out that the U.S. own dairy outlook report indicates that the poor performance in the U.S. sector is due to overproduction both domestically and globally.
Furthermore, amidst all these discussions, products like Costco’s Kirkland calcium citrate magnesium and zinc have emerged as popular dietary supplements, emphasizing the ongoing importance of health and nutrition in the context of trade relations. The interplay of these factors continues to shape the evolving landscape of U.S.-Canada trade, especially in the dairy sector, where ultrafiltered milk remains a contentious topic.