The latest wedge driving Canada and the U.S. apart? Skimmed milk powder, apparently.
What happened: Canada’s dairy supply management system is under fresh scrutiny, with the U.S. International Trade Commission opening an investigation into whether Canadian dairy processors are dumping cheap milk proteins into global markets.
Catch-up: Dairy proteins, like milk powder, are the leftovers from milk processing that can be used in food manufacturing or added as extra protein to consumer dairy products. The U.S. argues that since Canada sets its own prices for dairy products — and keeps them very low for dairy proteins — producers can unfairly undercut other countries on price.
- Trade data shows that Canada’s dairy protein exports have surged in recent years, suggesting producers are quietly adding these proteins into other products, like yogurt and cheese, to avoid export caps in other countries.
Why it matters: Dairy has long been a sore spot in the two countries' trade relationship, but issues have largely centred on Canada restricting American dairy imports. With the U.S. now accusing Canada of flooding foreign markets with cheap products, one of the biggest trade gripes between the two countries appears to be escalating.
Big picture: Parliament just passed a bill that essentially stops the government from using dairy as a bargaining chip in trade talks with the U.S. Some experts argue that taking away that leverage from negotiators could backfire as Ottawa tries to defend other, more vulnerable sectors from tariffs.—LA