FI Fast Facts:
S. dairy tariffs could create excess supply and lower prices.
Meanwhile, Canadian food producers could gain from disrupted U.S. imports.
Retailers now face higher prices and fulfillment delays.
The tit-for-tat tariff war initiated by U.S. President Donald Trump against Canada could wind up softening U.S. dairy prices and strengthening the Canadian packaged food sector, experts told The Food Institute.
Canadian Prime Minister Mark Carney’s pledge to match dollar-for-dollar the 50% tariff on some Canadian goods took effect Monday, applying to such items as clothing, metal parts and wood products, mimicking Trump’s actions.
The U.S. announced it would ban imports of many Canadian dairy and alcohol products starting Sept. 29. Imports of Canadian whey products and molasses, non-alcoholic beer, and alcoholic drinks including malt beer, wines, cider, whiskies, vodka, and other spirits will be banned, reported CNBC.
Carney said in a video address that Canada had to retaliate to protect its companies and jobs.
Tariffs Could Reshape Dairy Trade
Trade negotiations between the U.S. and Canada collapsed Aug. 21 over a variety of demands that Carney said would have undermined some of his country’s most basic industries, including autos, steel and forest products, and made Canada more reliant on the U.S.
The U.S. imported $382 billion in Canadian goods last year while Canada imported $333 billion in U.S. goods.
The $20 billion in new levies, which affect about 6% of Canada’s U.S. imports, hit U.S. dairy hardest: 50% tariffs on milk and cream, powders, whey and milk-protein concentrates, 25% on cheese and fresh curd, plus 50% on honey, molasses and baker’s mixes. The result could be excess U.S. supply, forcing prices lower while boosting Canadian production.
In addition to dairy, the tariffs include steel and aluminum, appliances, agricultural equipment, plastics and electronics.
Levies Could Send Food Prices Higher
“There is significant trade in a large variety of food and beverages between the United States and Canada,” noted David Lennarz, president of Registrar Corp. “Tariffs instituted by the United States, and those instituted by Canada today, will have a significant impact on the volume and prices of these products.
“Ultimately, consumers will find less choice and pay higher prices.”
Canadian importers will move quickly to mitigate the higher costs and lower volumes of shipments from the U.S. by sourcing from other countries, Lennarz said.
“Pricing will be volatile and unstable until more normal trade resumes,” the industry expert said.
“While many products from the U.S. don’t have substitutes from other origins (think premium U.S. made liquor), some do and will help fill the gaps,” Lennarz added.
A number of surveys already have indicated consumers are cutting back because of high prices, and a report released by GreyOrange found bare shelves will complicate the situation even further.
The “2026 Eye on Inventory Report: Shopper Edition” found in-store quantities of certain items are dwindling or are non-existent, sending would-be brick-and-mortar shoppers to their smartphones. And even omnichannel retailers are taking longer to fulfill orders.
Food for Thought Leadership
Katy Coffield, CEO and co-founder of Foodie Tribe, and Hannah Gray, confectionery scientist and creator behind One Sweet Mama, speak about the evolving role of influencers in the food and beverage industry. The conversation explores how influencer marketing has matured, what brands should look for when selecting creators, and why micro-influencers can deliver outsized value through engagement, authenticity, and highly targeted audiences.