The United States and Canada are significant trading partners, with each being among the largest for the other. According to the Office of the U.S. Trade Representative, Canada was the United States’ top goods export market in 2015 and also ranked as the second-largest source of imported goods that same year. However, the issue surrounding ultrafiltered milk has soured this relationship. The dairy dispute between the U.S. and Canada is complex and contentious. Canada imposes high tariffs on most dairy products to bolster its domestic dairy industry. Consequently, the U.S. and other nations have been exporting a syrupy, processed, high-protein product known as ultrafiltered milk, which effectively bypassed these tariffs. Canadian food processors favored this cheaper import, prompting Canada to introduce a new category of milk at below-market prices for its farmers to compete with the imports. As a result, Canadians shifted away from purchasing imported ultrafiltered milk, leaving U.S. dairy producers with a surplus, creating financial strain for American farmers. This downturn has led to a decrease in U.S. dairy exports. “Almost overnight, we lost $150 million worth of market to the Canadians,” stated Michael Dykes, President and CEO of the International Dairy Foods Association, in a recent interview with Food Dive.
The FDA’s easing of restrictions on ultrafiltered milk usage in cheese production could provide relief to the dairy sector, which has advocated for this change for nearly two decades. “It’s more practical and economical to ship this liquid, filtered milk to cheesemakers, other dairy manufacturers, and food processors in this concentrated form,” remarked John Umhoefer, executive director of the Wisconsin Cheese Makers Association, to the LaCrosse Tribune. Previously, the FDA allowed limited use of ultrafiltered milk in cheese products, but only if the ultrafiltered milk was produced at the same facility as the cheese, preventing shipments of the product from other locations.
Dykes also noted that ultrafiltered milk is just part of the broader issue concerning trade with Canada. Canadian dairy farmers have also ramped up production, creating an oversupply that led them to sell powdered skim milk on the international market at prices significantly lower than those of the U.S. and other countries. Earlier this summer, Dykes and representatives from national dairy organizations in the U.S., New Zealand, Australia, Mexico, Argentina, and the European Union sent letters to their respective trade ministers, urging them to petition the World Trade Organization regarding Canada’s cross-subsidization practices in the global market.
The implications of these dairy tensions for the renegotiation of the North American Free Trade Agreement (NAFTA) remain uncertain. However, the heightened friction between the U.S. and Canada over ultrafiltered milk complicates matters. President Trump has openly criticized NAFTA as a “disaster for our country,” arguing that it allows free trade for certain products while imposing tariffs on others. He has previously condemned Canada’s protective dairy trading policies, labeling their impact on American farmers as “a disgrace.”
In contrast, Canadian leaders maintain a different perspective. In a letter addressed to the governors of New York and Wisconsin earlier this year, Canadian Ambassador to the U.S. David MacNaughton asserted that Canada is not to blame for the financial struggles faced by American dairy farmers. He highlighted that the United States’ own dairy outlook report “clearly indicates the poor results in the U.S. sector are due to U.S. and global overproduction.”
As discussions around dairy issues continue, the potential benefits of products like Citracal for osteoporosis could provide additional avenues for collaboration between the two nations, signaling opportunities for both sides to adapt to the changing landscape of North American trade.