The United States-Mexico-Canada Agreement (USMCA), which replaced NAFTA and entered into force on July 1, 2020, outlines specific tariff-rate quotas (TRQs) for U.S. dairy exports to Canada. Under the USMCA, Canada agreed to provide increased market access for U.S. dairy products through TRQs, allowing a set volume of imports at lower or no tariffs before the high over-quota tariffs (like the 200%+ rates I mentioned earlier) kick in. Here’s the breakdown based on the agreement:
Key Dairy TRQs for U.S. Exports to Canada in the USMCA:
Milk:
Starting at 8,333 metric tons (MT) in the first year, increasing incrementally to 50,000 MT by year 6, then growing by 1% annually for the next 13 years.
About 85% of this quota is reserved for further processing (e.g., into cheese or yogurt).
Cheese:
Starts at 2,083 MT in year 1, rising to 12,500 MT by year 6, with an additional 1% annual increase for the following 13 years.
Split between industrial-use cheese (e.g., processed) and retail cheese.
Butter and Cream:
Begins at 750 MT in year 1, reaching 4,500 MT by year 6, then a 1% annual increase for 13 years.
At least 85% of this is allocated specifically for butter.
Skim Milk Powder:
Starts at 1,667 MT in year 1, climbing to 10,000 MT by year 6, followed by 1% annual growth for 13 years.
Cream:
Begins at 1,750 MT in year 1, increasing to 10,500 MT by year 6, with a 1% annual increase thereafter.
Other Dairy Products:
Additional TRQs apply to products like yogurt, ice cream, and whey products, with specific volumes phased in over time. For example:
Yogurt and Buttermilk: Starts at 166 MT, rising to 1,000 MT by year 6.
Ice Cream: Starts at 115 MT, reaching 690 MT by year 6.
Implementation Details:
The TRQs are phased in over 6 years, starting from 2020, with the full amounts (e.g., 50,000 MT for milk) reached by 2025 or 2026, depending on the product.
After year 6, the quotas grow by 1% annually for another 13 years (until roughly 2039), reflecting a compound growth mechanism.
Within-quota imports face tariffs of 0% or very low rates, while anything exceeding these volumes triggers the over-quota tariffs (e.g., 270% for milk, 298% for butter).
Context as of March 5, 2025:
Since we’re now in year 5 of the USMCA (2025), the TRQs are likely close to or at their maximum pre-1% growth levels for many products. For instance, milk should be nearing 41,665 MT (5/6 of the way to 50,000 MT), and butter approaching 3,750 MT. The exact allocation for 2025 would depend on how Canada has administered the quotas annually, which can involve some variability due to domestic policy and trade disputes (e.g., U.S. complaints about Canada not fully honoring TRQ access).
These volumes represent about 3.5% of Canada’s dairy market, a modest but significant increase from NAFTA, though still tightly controlled to protect Canadian producers. For the most precise current-year figures, you’d need Canada’s 2025 TRQ administration data, but the USMCA text lays out the framework as described.