Under existing trade agreements, notably the Canada-United States-Mexico Agreement (CUSMA), a substantial volume of dairy products enters Canada tariff-free. Specifically, the U.S. is permitted to export 49 million litres of milk to Canada annually without tariffs, a volume set to increase gradually over the next 13 years. Despite this access, Canada currently maintains a $520 million dairy trade deficit with the U.S., with American dairy exports to Canada surging by 67% since 2021, reaching $877 million in 2024. This makes Canada the U.S.’s second-largest dairy customer overall and its largest per capita.

For over six decades, supply management has been instrumental in delivering food security and sovereignty to Canada by ensuring domestic dairy production meets national demand. This system strategically aligns production with consumption, guaranteeing high-quality, diverse dairy products at stable prices for consumers while providing a fair return for dairy farmers. Beyond the farm gate, supply management significantly bolsters the Canadian economy, supporting 339,000 jobs across the supply-managed dairy, poultry, and egg sectors and contributing $30.1 billion to Canada’s Gross Domestic Product.

Recent global trade dynamics further underscore the necessity of Canada’s self-sufficiency in dairy. Supply management ensures a steady domestic supply of crucial food items, protecting consumers from shortages caused by supply chain disruptions, diseases, or natural disasters. For instance, while egg prices in the U.S. soared due to avian flu, Canadian consumers remained largely unaffected, demonstrating the resilience fostered by the system. Furthermore, supply-managed product prices generally align with or remain below Canada’s overall inflationary trends; in December 2024, the 12-month average dairy consumer price index rose 2%, lower than the 2.7% increase for food in general.