The United States and Canada, two of the world's largest trading partners, are working through another round of trade friction, this time centered on a new U.S. restriction covering a handful of Canadian consumer goods.
The United States said it will begin restricting imports of Canadian alcoholic drinks, motorcycles and dairy products starting September 29. The two countries trade well over a trillion dollars in goods and services each year under the framework of the United States Mexico Canada Agreement, and disputes over specific sectors, from dairy quotas to softwood lumber, have recurred periodically even as the broader trading relationship has remained stable.
Dairy has been a particularly sensitive area in the relationship for years, since Canada maintains a supply management system that limits how much foreign dairy can enter its market, a system Canadian officials have defended as necessary to support domestic farmers and one that U.S. producers have periodically pressed to open further. Motorcycles and alcoholic beverages have featured in past trade actions between the two countries as well, often as targeted responses in broader negotiations.
Businesses on both sides of the border, including beverage makers, motorcycle manufacturers and dairy producers, are now working to understand how the new restrictions will affect supply chains and pricing ahead of the September 29 start date. Trade groups in both countries have said they are seeking more detail from officials on the scope and duration of the measure.
Officials from both countries are expected to continue discussions in the coming weeks, and businesses will be watching for any sign of a broader resolution before the restrictions take effect.
What is the USMCA?
It is the free trade agreement among the United States, Mexico and Canada that replaced NAFTA and governs most trade among the three countries.