U.S. Dairy Cites New USITC Report in Call for Action on Canadian Dairy Trade Practices
May 28, 2026
The National Milk Producers Federation and the U.S. Dairy Export Council today reiterated their call for the U.S. Trade Representative to use the U.S.-Mexico-Canada Agreement (USMCA) joint review process to address Canada’s distortionary nonfat milk solids export practices. Their statement follows yesterday’s release of the U.S. International Trade Commission’s (USITC) Section 332 report, Nonfat Milk Solids: Competitive Conditions for the United States and Major Foreign Suppliers.
The report confirms what NMPF and USDEC have long documented: that 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 report goes on to note that the Canadian government-administered 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.’”
The Canadian structural surplus and pricing system outlined in the report served as a basis for NMPF and USDEC to work with the first Trump administration to secure commitments during the USMCA negotiations for Canada to limit its artificially low-priced skim milk powder and milk protein concentrate exports. The deal established an annual threshold over which these nonfat milk solids exports are subject to a surcharge to ensure U.S. producers are not being undercut in the U.S. or international markets.
While the report acknowledges that Canada has to date limited its exports of products formally classified as nonfat milk solids, it also cites a marked increase in Canadian exports of products categorized under tariff codes for “blended dairy products” and “protein isolates,” that fall outside of the USMCA-disciplined tariff categorization. The report estimates that from 2013 to 2015 exports under the “protein isolate” tariff code were just 76 metric tons. Post USMCA implementation, the volume of protein isolates has grown dramatically to over 32,000 metric tons from 2022 to 2024. While the tariff code is not exclusive to dairy proteins, USITC estimates that most of the exports were dairy based.
USITC notes that the dairy products are entering the United States from new and expanded processing plants in British Columbia and Manitoba. The report cites that “[i]n addition to access to cost-competitive sources of [nonfat milk solids] components, these facilities received grants and loans from national and provincial governments.”
In testimony before the USITC as part of the investigation in July 2025, NMPF and USDEC’s Jaime Castaneda and William Loux called out the detrimental effects of Canada’s cumulative pricing and trade practices on U.S. dairy farmers and processors. Castaneda said, “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 added, “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 complemented comprehensive comments submitted by NMPF and USDEC as part of the investigation and coordination among members to demonstrate the breadth of the issue. The organizations will continue to work with USTR to leverage the report and ensure Canadian attempts to circumvent their dairy protein export commitments are comprehensively addressed in the ongoing USMCA joint review process.
