U.S. dairy exports to Canada up 67 per cent

Glacier FarmMedia—It’s a “horrible” trade deal, maybe the worst in history, says the U.S. president.

But while Donald Trump may believe the Canada-U.S.-Mexico Agreement is ripping off ordinary Americans, data shows that it’s helping U.S. dairy farmers.

In the last few years, American exports of cheese, butter, whey and other dairy products to Canada have climbed by 67 percent – going from C$525 in 2021 to $877 million in 2024.

Two American economists, one from Oklahoma State University and the other from Cornell, have recently studied the trade in dairy between the United States and Canada.

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They concluded that CUSMA is working as intended by expanding dairy exports from the U.S. to Canada.

“In light of Canada’s revised procedures … U.S. exports to Canada experienced a substantial increase for affected dairy products,” wrote ag economists Aleks Schaefer of OSU and Chris Wolf of Cornell in a paper published in Food Policy in February.

The two economists said the CUSMA mechanism to resolve disputes has partially opened up the Canadian market for dairy.

“(It) effectively worked to remove the barrier (to trade).”

The paper refers to a trade dispute from 2021-22 when the U.S. used the trade agreement to challenge Canada’s import policies around dairy.

In 2021, the U.S. government filed a grievance under CUSMA, saying Canada was undermining the “ability of American dairy exporters to sell a wide range of products to Canadian consumers.”

The case centred around tariff rate quotas (TRQ) and how Canada’s dairy industry was managing those quotas. Under CUSMA, the U.S. got access to a quota that represented 3.6 per cent of Canada’s dairy market.

The U.S. claimed Canada was allotting the import quota to Canadian dairy processors, which didn’t want competition from the United States.

Early in 2022, a CUSMA tribunal sided with the U.S.

“(The) current Canadian system, which sets aside significant TRQ volumes only for processors, does not pass muster under the treaty,” they said.

Canada complied with the ruling, which has dramatically increased the volume of U.S. dairy exports to Canada.

In 2021, the U.S. exported $524.9 million worth of cheese, milk, cream, whey, butter and other dairy to Canada, according to Statistics Canada data.

Over the next few years, that figure jumped by $352 million:

• 2021 U.S. dairy exports to Canada — $524.9 milion
• 2022 — $718 million
• 2023 — $757 million
• 2024 — $877 million

The largest increase was butter and cheese imports. Butter, other fats and oils went from $86 million in 2021 to $213 million in 2024.

Cheese imports from the U.S. were $104 million in 2021 and $168 million in 2024.

Dairy Farmers of Canada is familiar with the import data and is frustrated with the recent threat of tariffs on Canadian dairy exports to the U.S.

“During the renegotiation of CUSMA, the United States secured substantial tariff-free access to the Canadian dairy market,” David Wiens, Dairy Farmers of Canada president, said March 8.

“The U.S. enjoys a significant dairy trade surplus with Canada, exporting $877.5 million in dairy products while importing $357.9 million in return.”

The economists from Cornell and Oklahoma State didn’t publish detailed trade data in their Food Policy paper, but it’s obvious CUSMA offers real benefits for Americans.

“Canadian TRQ concessions led to significant trade liberalization,” they wrote.

“Our research finds that the (CUSMA) dispute settlement mechanism can work to efficiently and effectively resolve trade disputes.”