Despite Trump’s “abrasive” rhetoric, the U.S. dairy industry itself is not seeking to dismantle Canada’s entire supply management system. Instead, their primary grievances revolve around two specific areas: Canada’s method of allocating tariff-free import quotas for dairy products and its controversial practice of selling excess milk protein at significantly low prices on the international market. These specific practices are seen as barriers to fair trade.

The U.S. dairy industry argues that Canada’s current quota allocation system heavily favors large Canadian dairy processors, effectively restricting American access to the lucrative Canadian market. Evidence suggests that tariff-free imports rarely reach their full quota limits, indicating an impediment to trade. The U.S. desires changes that would permit retailers and the food-service sector to directly import U.S. dairy products, alongside stricter enforcement for importers who fail to utilize their full quotas.

Furthermore, the Trump administration previously ordered an investigation into Canada’s pricing strategies for milk solids destined for export, signaling a direct challenge to the commercial practices impacting global dairy economics. Despite Canada’s recent enactment of a new law that explicitly bars increases to dairy import quotas or tariff reductions, the U.S. dairy sector believes there remains ample room for negotiation on the operational mechanics of the supply management system.