U.S. dairy industry presses Canada for changes to quota – The Globe and Mail U.S. dairy industry presses Canada for changes to quota – The Globe and Mail

With the looming threat of a 35% tariff on Canadian goods beginning on August 1 unless a new trade deal is signed before then, U.S. President Donald Trump and American dairy exporters are demanding changes to the country’s supply management system. Long a point of contention between the two countries, the U.S. had previously argued unsuccessfully before a United States-Mexico-Canada Agreement (USMCA) panel in 2021 and 2023 that Canada’s tariff rate quota licence rules were a breach of that trade agreement, preventing American exporters from accessing the Canadian market tariff-free.

Matthew Kronby, a partner in Osler’s International Trade and Investment practice, tells The Globe and Mail that the USMCA panel found Canada had could exercise broad discretion in how it allocated quota.

As negotiations continue, Canada has so far resisted U.S. demands to overhaul or scrap the supply management system.

Meanwhile, as a result of another dispute under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership — and for which New Zealand threatened retaliatory tariffs last year — Canada has agreed to allow importers of New Zealand dairy access to the tariff rate quota beginning in 2026.

“Canada and New Zealand, like a lot of countries, are trying to put their trade relationships on solid ground in the face of Trump’s actions,” Matthew says.

He explains that the deal with New Zealand points to the benefits of the rules-based trading system, but that it is unlikely that Canada will give similar concessions to the U.S. as it has moved away from that system.

“It is hard for me to imagine Canadian negotiators making fundamental changes to supply management in order to get a temporary — at best — semi or quasi deal with the Trump administration … an administration that’s demonstrated that even if you have a formal trade deal, they’re not going to abide by it.”

If you have a subscription, you can read the full articles — “U.S. dairy industry presses Canada for changes to quota” and “Canada shores up New Zealand trade with dairy concessions in face of U.S. pressure” — on the Globe and Mail website.