Two major American dairy organizations have renewed their push for federal trade action against Canada following the release of a new government report on dairy trade practices. The National Milk Producers Federation and the U.S. Dairy Export Council are urging the U.S. Trade Representative to utilize the U.S.-Mexico-Canada Agreement review process to tackle Canada’s problematic nonfat milk solids export policies.
The organizations’ statement comes after yesterday’s publication of the U.S. International Trade Commission’s Section 332 report titled “Nonfat Milk Solids: Competitive Conditions for the United States and Major Foreign Suppliers.”
According to the dairy groups, the report validates concerns they have raised for years about Canadian milk production quotas that “aim to match domestic supply and demand for butterfat lead to a level of raw milk production that results in a domestic structural surplus of [nonfat milk solids] components.” The study further indicates that Canada’s government-controlled milk pricing system “unlinks its relatively high farmgate price of milk from the price that [nonfat milk solids] processors pay for milk components in Canada using regulated ‘price discrimination.’”
These Canadian practices described in the report formed the foundation for the dairy organizations’ collaboration with the first Trump administration to obtain commitments during USMCA negotiations. Canada agreed to restrict its artificially low-priced skim milk powder and milk protein concentrate exports, establishing annual limits above which these exports face surcharges to protect U.S. producers from being undercut domestically and internationally.
Although the report recognizes that Canada has so far kept its exports of formally classified nonfat milk solids within limits, it also documents a significant rise in Canadian exports of items listed under tariff codes for “blended dairy products” and “protein isolates” that escape USMCA oversight. The study shows that protein isolate exports under these codes totaled merely 76 metric tons from 2013 to 2015. Following USMCA implementation, protein isolate volumes surged dramatically to exceed 32,000 metric tons between 2022 and 2024. Though the tariff classification isn’t limited to dairy proteins, the commission estimates most exports were dairy-derived.
The commission’s report indicates these dairy products are coming into the United States from recently built and expanded processing facilities in British Columbia and Manitoba. The study states that “in addition to access to cost-competitive sources of [nonfat milk solids] components, these facilities received grants and loans from national and provincial governments.”
During July 2025 testimony before the commission as part of the investigation, representatives Jaime Castaneda and William Loux from the dairy organizations highlighted the harmful impact of Canada’s combined pricing and trade policies on American dairy farmers and processors. Castaneda stated, “it is absurd that Canadian dairy producers receive one of the highest farmgate milk prices in the world by a wide margin, yet their nonfat milk solids end up on the global market at prices below our cost of production.” Loux commented, “Canada’s actions distort markets and undermine fair competition … This information is critical to bring substantive results for U.S. dairy producers and processors, including during the upcoming USMCA review process.”
The testimony supported detailed written comments the organizations filed during the investigation and coordination efforts among members to showcase the scope of the problem. The groups plan to continue working with the U.S. Trade Representative to use the report’s findings and ensure Canadian efforts to bypass their dairy protein export obligations are fully addressed during the ongoing USMCA joint review process.
