The newly signed law explicitly prevents the Canadian government from lowering duties on dairy imports that exceed the quotas previously agreed upon in the USMCA. Canada’s system of supply management for dairy, poultry, and eggs uses high out-of-quota tariffs—often topping 250% for dairy—to control domestic prices and supply, effectively limiting foreign market access. This protective measure is a cornerstone for Canadian milk producers, ensuring stable incomes and domestic control over production.

This legislative action has drawn sharp criticism from U.S. political figures, including President Donald Trump, who has frequently lambasted Canada’s “tremendously high tariff” on U.S. dairy imports, citing it as an impediment to American exporters. While the origins of Bill C-202 predate Trump’s recent focus, analysts suggest his vocal demands for tariff reductions likely served as a catalyst for its rapid passage through Canadian Parliament.

The swift approval of the bill, which had previously stalled, is seen by some as a reflection of the evolving bilateral relationship between the U.S. and Canada. Becky Rasdall Vargas of the International Dairy Foods Association noted the rapid approval from both chambers, suggesting a renewed Canadian determination to protect its supply-managed sectors against external pressures, which could impact future agribusiness trade discussions.