Trump’s Claim About Canadian Dairy Tariffs Misleads on Trade Reality

President Donald Trump has repeatedly claimed that Canada imposes staggering tariffs of 250% or 270% on U.S. dairy products, using these figures to justify his own tariff plans. However, these statements paint an incomplete and misleading picture of the actual trade situation between the two countries.

The reality is far more nuanced. While such high tariff rates do exist in Canada’s trade policy, they only apply when U.S. exports exceed predetermined quotas—thresholds that American producers have never come close to reaching.

Under the United States–Mexico–Canada Agreement (USMCA), which Trump himself negotiated during his first administration, American dairy products face zero tariffs as long as they remain below these quota limits. According to the International Dairy Foods Association (IDFA), U.S. dairy exports have utilized only about a quarter of the available quota allowances.

“In practice, these tariffs are not actually paid by anyone,” explained Al Mussell, research lead at Agri-Food Economic Systems, a Canadian research organization, in a statement to CNN.

During a March 16 interview with Sharyl Attkisson, Trump claimed, “They have for dairy products, some dairy products, 270% tariff. Nobody knows that.” He added, “So we want to sell milk into Canada, and they throw a 270% price increase on the milk.”

Trump has also falsely suggested that the Biden administration allowed these tariffs to increase. “Under Biden they just kept raising it,” he said during an Oval Office discussion on March 7. However, the over-quota rates on dairy exports to Canada scheduled for January 2025 are virtually identical to those in place during the final year of Trump’s first term in 2020.

The dairy trade between the two nations has actually flourished under the current framework. In 2024, the U.S. exported more than $1.1 billion in dairy products to Canada, representing a nearly 55% increase since 2020. Canada now stands as the second-largest international recipient of U.S. dairy, behind only Mexico.

Chuck Nicholson, associate professor in the Department of Agricultural and Applied Economics at the University of Wisconsin-Madison, explained that both countries employ similar systems of “Tariff Rate Quotas” and “Over-Quota Tariffs” to regulate dairy trade. The difference lies in the scale—Canada’s over-quota rates are significantly higher than America’s, which typically range from 24% to 39% for products like butter.

Canada implemented these quotas to protect its domestic dairy industry through a supply management system. By limiting imports, the Canadian government helps maintain higher minimum dairy prices for its producers. Canadian Ambassador to the U.S. Kirsten Hillman defended the system, saying it aims to “protect our farmers and families.”

The U.S. dairy lobby has raised concerns about other aspects of Canada’s dairy policies. The IDFA argues that Canadian processors use much of the quota by purchasing from their own U.S.-based operations. “Canada is preserving most shares of their TRQs for Canadian processors, causing fill rates to remain low across several dairy product categories,” said Matt Herrick, IDFA’s executive vice president.

This issue led to a formal dispute under the USMCA in 2021, with an initial ruling favoring the U.S. dairy industry. However, after Canada made adjustments to its policies, a subsequent USMCA panel in November 2023 determined that the updated regulations were permissible under the trade agreement.

While the debate over Canada’s dairy quotas continues, economists studying the issue have suggested that even if Canada were to fully align its quota allocation system with U.S. demands, the practical impact on American dairy exports would likely be minimal.

As the Biden administration’s planned 25% tariff on various Canadian and Mexican imports approaches its April 2 implementation date, the ongoing discussion about tariffs remains highly relevant to U.S.-Canada trade relations.