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To support his plan to increase tariffs, President Donald Trump has repeatedly said that the Canadian government charges U.S. farmers a 250% or 270% tariff on dairy products exported to Canada. That’s misleading. There are rates that high on the books, but they would only be charged if U.S. exports exceed predetermined tariff rate quotas, which the dairy exports don’t come close to meeting.
Below these quotas, American dairy sales to Canada face zero tariffs. The United States–Mexico–Canada Agreement, or USMCA, a trade agreement negotiated by the first Trump administration, had raised the thresholds for the protectionist tariffs. Some American industry stakeholders argue that Canadian regulations impede the United States’ ability to reach these quotas, but U.S. dairy has never faced triple-digit tariffs.
During an interview with Sharyl Attkisson of Sinclair that aired on March 16, Trump claimed, “Nobody says that with Canada, that they charge, our farmers – think of this. They have for dairy products, some dairy products, 270% tariff. Nobody knows that.” He continued, “So we want to sell milk into Canada, and they throw a 270% price increase on the milk.”
Trump has repeatedly made similar claims regarding Canadian tariffs on U.S. dairy exports.
On at least two occasions, he has wrongly claimed that the Biden administration had allowed the tariffs to increase. “In Canada, we find that they’re charging us over 200% for dairy products. You know about that. And when I left, we had that well taken care of, but under Biden they just kept raising it — very difficult to deal with the Canadian representatives, 250 percent for dairy products, tariff,” Trump said during a discussion with reporters in the Oval Office on March 7. The over-quota rates on dairy exports to Canada as of January 2025 are virtually identical to the last year of Trump’s first term in office in 2020.
In 2024, the U.S. exported more than $1.1 billion in dairy products to Canada, a nearly 55% increase in exports since 2020. None of it was subject to triple-digit Canadian tariffs. Canada is the second-largest international recipient of U.S. dairy behind Mexico.
We reached out to the White House about the president’s claims but did not receive a response.
Trump has implemented or threatened numerous tariffs targeting Canadian goods, and the administration’s monthlong delay of its announced 25% tariff on many Canadian and Mexican imports is set to expire on April 2 — the same day that the administration plans to apply reciprocal tariffs to match the duties charged by other nations for U.S. exports.
High Tariffs Only Enforced over Quota Thresholds
The maximum tariff rates for multiple U.S. dairy products exported to Canada do approach or exceed the 250%-270% range. For example, as of Jan. 1, the maximum Canadian import tariff was 245.5% for cheese and curd, 298.5% for butter, and 241% for liquid milk.
However, Trump failed to mention that these large tariffs are levied only if U.S. dairy exports exceed a predetermined quota.
Chuck Nicholson, associate professor in the department of agricultural and applied economics at the University of Wisconsin-Madison, explained to us in an email that “both the US and Canada use a system of tariffs for dairy products that includes two elements, ‘Tariff Rate Quotas’ (TRQs) and ‘Over-Quota Tariffs.’” He continued, “TRQs indicate an amount of product that can enter the country at low tariff rates (or, in the case of US dairy products to Canada, generally zero tariffs).”
The tariff schedule published by the Canada Border Services Agency shows that for nearly all dairy products, American producers are fully exempted from paying tariffs so long as the quantity of exports remains below the quota (this is denoted by the label “UST” under the “Applicable Preferential Tariffs” column in the document).
Nicholson told us that the Canadian government implemented import quotas to increase the competitiveness of the nation’s domestic dairy industry through a supply management system. By limiting dairy imports through quotas, the Canadian government aids domestic producers by increasing minimum dairy prices. Kirsten Hillman, the Canadian ambassador to the U.S., told CBS News on March 9 that the quotas seek to “protect our farmers and families.”
As we’ve explained before, tariffs are customs duties paid by domestic importers — in this case, Canadian processors, distributors and retailers purchasing American dairy products. Therefore, Nicholson told us that over-quota tariff rates in the triple digits ensure that American imports stay below the quotas.
Nicholson also noted that “the US has a similar system of trade protection for dairy products, albeit with generally lower Over-Quota Tariff rates.” For example, he told us that while butter imported from Canada to the U.S. faces no tariffs under a predetermined quota threshold, it is subject to over-quota tariffs of about 24%, or up to 39%.
The current tariffs and quotas for the dairy industry were put in place by the USMCA — a trade agreement that Trump negotiated and signed into law in 2020. The USMCA replaced the North American Free Trade Agreement, or NAFTA.
We previously fact-checked Trump in 2020 when he falsely claimed in October of that year that the USMCA “got rid of the tariffs” on American dairy products exported to Canada. As we explained then, while the USMCA raised quota thresholds for many dairy exports, it did not remove such quotas.
It is worth noting that the TRQs on American dairy products are an exception rather than the norm. The USDA website states that under both the USMCA and NAFTA, “almost all agricultural products traded between the United States and Canada” face no tariffs or quotas.
U.S. Dairy Exports Do Not Meet Tariff Quotas
Currently, American producers do not export enough dairy to meet Canadian tariff rate quota thresholds. Therefore, Al Mussell, research lead and founder of the Canadian research organization Agri-Food Economic Systems, told CNN that “in practice, these tariffs are not actually paid by anyone.”
The International Dairy Foods Association, a lobbying group that advocates on behalf of the U.S. dairy industry, said in a March 7 statement that “the U.S. has never gotten close to exceeding our USMCA quotas.”
The IDFA sent us calculations based on Canadian utilization data that identified the proportion of each dairy product’s annual tariff quota met thus far by U.S. exporters, also known as the “fill rate.” In an email response, IDFA explained that Canadian tariff quotas measure imports on either a calendar year basis or a “quota year” basis that ends on July 31. According to the IDFA’s calculations, at the end of 2024, the average fill rate for dairy products subject to a calendar year tariff quota was only 26.72%. For dairy products subject to a quota year tariff, the average fill rate as of March 2025 was only 21.24%.
Trump also claimed during the March 16 interview that Canada enacts “a lot of non-monetary tariffs” that restrict U.S. dairy exports. It’s true that the U.S. dairy lobby has expressed numerous grievances regarding Canadian trade policy.
The U.S. lobby says that Canadian dairy processors use up much of the quotas by buying products from their own dairy operations based in the U.S. “Canadian companies on both sides of the border” claim shares of the American import quota, Matt Herrick, the IDFA’s executive vice president, told us in an email. “Canada is preserving most shares of their TRQs for Canadian processors, causing fill rates to remain low across several dairy product categories.”
The IDFA also opposes other regulations enacted by the Canadian government, such as pricing policies for dairy proteins and compositional standards for cheese.
Becky Rasdall Vargas, senior vice president of trade and workforce policy at the IDFA, told Farm Progress that these regulations prevent American producers from exporting as much dairy to Canada as they would like. She explained, “Our complaint is we’re not able to get anywhere near [the quota] cap, even though we have buyers who tell us they would like to bring in our product.”
Elaborating on this argument, economists based in Canada and the U.S. explained in a 2023 article for a University of California publication, “The United States believes that Canada violated the USMCA by giving most of the TRQ allocation to Canadian processors and thereby reducing U.S. access to Canadian retail markets.” They explained, “Canada currently allocates 85%–100% of the TRQs to domestic processors on a market-share basis, depending on the type of dairy product. As a result, the processors mostly import dairy products that must undergo additional processing before they are ready for retail sale.”
In December 2021, a USMCA dispute settlement panel ruled in favor of the U.S. dairy industry on this matter. After Canada subsequently implemented changes, another ruling by a USMCA panel in November 2023 found that the nation’s updated policies were permissible under the trade agreement and could continue. The IDFA and some lawmakers maintain that Canada continues to violate the USMCA through its dairy policies.
Ultimately, the economists writing for the University of California publication concluded that the U.S. dairy industry’s concerns regarding violations of the USMCA have little real-world effect on the American dairy industry. “If Canada were to change their TRQ allocation system to fully align with the petition from the United States, not much would change regarding the makeup of Canadian dairy imports,” they wrote.
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Source: FactCheck
