As the sun rose over Ottawa this week, Canadian dairy farmers faced an unwelcome wake-up call from across the border. The U.S. International Trade Commission (ITC) announced a preliminary investigation into whether Canadian dairy protein exports are being “dumped” into American markets at artificially low prices.
The irony wasn’t lost on industry observers. For years, American producers have criticized Canada’s supply management system for being too protective. Now, they’re arguing that certain Canadian dairy exports are too competitive.
“We’ve gone from being accused of hiding behind tariff walls to suddenly being accused of aggressive pricing in export markets,” says David Wiens, vice-president of Dairy Farmers of Canada. “The reality is far more complex than either narrative suggests.”
At the heart of this trade tension are milk protein isolates and concentrates—high-value ingredients used in everything from protein shakes to infant formula. The U.S. Dairy Export Council claims these Canadian exports have increased dramatically, threatening American producers who can’t match the prices.
The timing is particularly sensitive. Just three years after the implementation of the USMCA trade agreement, which granted American producers increased access to Canada’s dairy market, relations are again souring. The investigation could potentially lead to countervailing duties against Canadian dairy exports if the ITC finds evidence of unfair practices.
But many Canadian industry experts see the investigation as political theater rather than substantive policy.
“This is classic election-year posturing,” explains Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University. “American dairy has significant influence in key electoral states like Wisconsin and New York. Starting an investigation scores political points, regardless of the outcome.”
The numbers tell a complicated story. While Canadian exports of certain dairy proteins have increased, they remain a tiny fraction of the massive U.S. market. Statistics Canada data shows that dairy exports to the U.S. totaled approximately $478 million last year—less than 1% of America’s $60-billion dairy industry.
For Canadian dairy farmers like Peter Strebel, who runs a 120-cow operation near Listowel, Ontario, the investigation feels like shifting goalposts.
“First they wanted more access to our market, which they got under USMCA. Now they’re upset when we try to compete in theirs,” Strebel says. “At some point, you have to wonder what would actually satisfy them.”
The supply management system, which has regulated Canadian dairy production since the 1970s, uses production quotas and import controls to stabilize prices. Critics argue this creates inefficiencies, while supporters point to the stability it provides rural communities and family farms.
What makes this investigation particularly complex is that Canada’s dairy processing sector has evolved. Companies like Saputo and Agropur have become multinational operations with significant U.S. production facilities. The line between “Canadian” and “American” dairy has blurred considerably.
Trade lawyer Mark Warner, who specializes in Canada-U.S. disputes, sees the investigation as following a predictable pattern. “The dairy relationship has always been contentious. Supply management isn’t going away, but neither are American complaints about it. Both sides have learned to turn these disputes into political currency.”
For consumers on both sides of the border, the practical impact may be minimal for now. Retail prices are driven more by domestic factors like transportation costs, labour, and energy prices than by trade disputes over specialized ingredients.
But if the investigation leads to duties or other trade barriers, the ripple effects could eventually reach grocery shelves. Higher costs for protein ingredients would impact food manufacturers who use these components in everything from yogurt to energy bars.
“The food system is incredibly interconnected,” explains Jordan Kniaziew, a food industry analyst. “What starts as a technical dispute over milk proteins can eventually affect consumer prices across dozens of categories.”
The ITC investigation unfolds against a backdrop of broader agricultural tensions. Climate change, labour shortages, and volatile input costs are challenging farmers everywhere. Trade disputes add another layer of uncertainty to already difficult business conditions.
For now, the Canadian government is taking a measured approach. Agriculture Minister Lawrence MacAulay has pledged to “vigorously defend” Canadian dairy interests while maintaining that all exports comply with trade obligations.
Officials at Global Affairs Canada point out that similar investigations in the past have often concluded without major disruptions. “We’ve been down this road before,” says one official who requested anonymity. “These processes have built-in safeguards against politically motivated claims.”
As the investigation proceeds through its preliminary phase, both countries’ dairy sectors are preparing their arguments. American producers will emphasize market disruption, while Canadians will focus on the relatively small scale of exports compared to the U.S. market.
What happens next depends largely on technical assessments of pricing data and market impacts. The ITC will need to determine if Canadian exports are being sold below fair market value and if those sales are causing material harm to U.S. producers.
Whatever the outcome, the dispute highlights the enduring complexity of agricultural trade—where national policies, regional politics, and global markets intersect in ways that can turn even a glass of milk into an international issue.
