The International Dairy Foods Association (IDFA) is urging the U.S. government to take stronger action against foreign trade policies that could increase manufacturing costs, restrict export opportunities and weaken the competitiveness of American dairy businesses. In submissions to the Office of the U.S. Trade Representative (USTR) and the U.S. International Trade Commission (USITC), the association highlighted concerns involving the European Union (EU) and Canada.
IDFA’s submissions emphasize the importance of addressing international trade practices that disadvantage U.S. dairy manufacturers while maintaining transparent, predictable and evidence-based trade policies. The association believes that foreign regulations and pricing mechanisms can create additional financial and operational challenges for American dairy processors and exporters.
EU Carbon Border Mechanism Raises Dairy Equipment Cost Concerns
In comments submitted to USTR, IDFA expressed concerns about the potential expansion of the European Union’s Carbon Border Adjustment Mechanism (CBAM). The mechanism introduces carbon-related charges on certain carbon-intensive imports entering the EU. Although dairy products are not currently included in CBAM’s existing or proposed coverage, IDFA warned that future expansions could indirectly affect the U.S. dairy industry.
The primary concern involves industrial materials and components used in dairy-processing equipment. Many American dairy manufacturers depend on specialized machinery produced by European suppliers, particularly for processing operations where alternative equipment sources may be limited.
If CBAM-related costs increase the prices of steel, aluminum and other carbon-intensive materials used by European equipment manufacturers, these additional expenses could eventually be passed on to American buyers. This could raise the cost of purchasing, maintaining and upgrading dairy-processing machinery.
Becky Rasdall Vargas, IDFA’s senior vice president of trade and workforce, emphasized that policymakers must consider the wider implications of CBAM expansions on U.S. manufacturing costs and supply chains.
IDFA urged USTR to oppose extending CBAM coverage to downstream products and maintain the exclusion of agricultural and food products. It also called for greater clarity and protection under the EU’s inward processing provisions to prevent additional carbon-related costs from being transferred through international supply chains to American businesses.
Canada’s Dairy Pricing System Draws Trade Policy Criticism
In a separate submission to USITC, IDFA addressed the implementation of Section 338 of the Tariff Act of 1930, also known as 19 U.S.C. 1338. This provision gives the U.S. President authority to impose import duties of up to 50% on products from countries determined to have discriminated against U.S. commerce.
The USITC requested public comments on how discriminatory or unreasonable foreign trade practices should be identified and evaluated when applying this provision.
IDFA highlighted Canada’s dairy pricing system as an example of policies that could disadvantage American dairy businesses. According to the association, Canada’s milk-class pricing policies result in below-cost-of-production prices for certain milk proteins and nonfat milk solids.
These pricing arrangements can make commercially viable U.S. dairy imports less competitive in the Canadian market, creating challenges for American manufacturers seeking to expand their international sales.
The association also identified European regulations, including the Corporate Sustainability Due Diligence Directive (CSDDD) and CBAM, as policies that could affect the competitiveness of U.S. dairy companies.
IDFA Calls for Transparent and Proportionate Trade Remedies
Beyond identifying specific trade concerns, IDFA urged USITC to establish clear and transparent procedures for evaluating foreign policies that potentially discriminate against American commerce.
The association emphasized three priorities: protecting confidential business information, applying consistent evidence-based evaluation standards and ensuring that any recommended trade remedies remain targeted and proportionate to the identified practices.
Rasdall Vargas acknowledged the administration’s efforts to use available trade mechanisms to strengthen American manufacturing. However, she stressed that these measures should operate within a predictable regulatory framework that allows dairy companies to plan investments, manage supply chains and compete internationally.
Implications for the U.S. Dairy Industry
The concerns raised by IDFA extend beyond international tariffs and direct dairy product exports. They also highlight how environmental regulations, industrial input costs and foreign pricing systems can influence the economics of dairy processing.
For American dairy manufacturers, higher machinery costs could affect capital expenditure, processing efficiency and long-term investment decisions. Meanwhile, restrictions arising from foreign pricing arrangements could limit opportunities for U.S. dairy ingredients and milk-derived products in international markets.
As global dairy trade becomes increasingly interconnected, predictable trade policies will remain important for processors, exporters and equipment suppliers.
IDFA’s submissions reflect the association’s position that protecting American dairy competitiveness requires addressing both direct trade barriers and indirect regulatory costs. The outcome of the USTR and USITC reviews could influence future discussions on trade enforcement, market access and the operating environment for the U.S. dairy manufacturing sector.