What the US wants from Canada to keep free trade in place

With trade talks between the U.S. and Canada still on hold, U.S. officials have laid out their clearest demands yet for maintaining free trade between the two countries.

The list includes further opening up the Canadian dairy market to American farmers and overhauling an online streaming law that the U.S. says “discriminates” against American tech and media companies.

The US also wants Canadian provinces to lift a ban on the sale of American liquor that was introduced earlier this year in response to sweeping tariffs imposed by President Donald Trump.

These and other demands were laid out by U.S. Trade Representative Jamison Greer before a congressional committee Wednesday as part of a broader review of the North American Free Trade Pact, known as USMCA, that is underway.

Both Canada and Mexico want it extended, although Trump has considered withdrawing from the agreement. Greer told Congress that the USMCA had been “successful to some extent” but that changes needed to be made to continue.

Here's a breakdown of what the US wants from Canada.

Canada's dairy supply management system remains a persistent US pain point.

Trump himself has raised the issue several times, including in a letter earlier this year in which he threatened Canada with a blanket tariff rate of 35%. In it, he accused Canada of levying “extraordinary tariffs on our dairy farmers – up to 400 percent.”

Canadian dairy products are produced under what is known as a supply chain management system, which strictly controls production quotas and imports to support local farmers.

As a result, Canadians often pay higher prices for dairy products due to restrictions.

Some U.S. dairy products are allowed duty-free in Canada up to a certain limit. However, this limit was never reached, meaning Canadian tariffs on U.S. dairy products were not imposed.

Canada is among the largest importers of dairy products to the United States, purchasing $1.1 billion worth of products in 2024.

But the U.S. believes the system in its current form unfairly limits market access for its dairy products in Canada, Greer said, and that Canada should expand access under the USMCA.

Greer also wants Canada to look into exporting “certain dairy products” to America. The US has accused Canada of dumping products into international markets at low prices, undermining competition.

In August, Carney said dairy supply management was not “on the table” in ongoing trade talks with the United States. But in the last USMCA review during Trump's first term, Canada relented and allowed greater access for American dairy products at low or no tariffs.

Another point of contention is a Canadian law called the Online Streaming Act, which was passed in 2023 by the government of former Prime Minister Justin Trudeau.

The law requires U.S. media companies such as Netflix and Spotify to pay to support and promote Canadian content on their platforms.

It also gives Canada's broadcasting regulator the power to impose financial penalties on any companies that break the law.

Its goal is to protect Canadian media “for the benefit of future generations of artists and creators in Canada,” the government said.

Greer told Congress that the law “discriminates against American technology and media firms” and that the policy needs to be revised, although he did not specify how.

He added that the U.S. is also seeking a resolution on the Online News Act, a separate Canadian law that requires tech giants like Meta and Google to pay news outlets for content that appears on their platforms in Canada.

The law has been controversial, with Meta blocking news access for Canadian users on Facebook and Instagram since its inception to protest the changes.

Trump's overall 35% tariffs on Canada, as well as his industry-specific tariffs on Canadian metals, lumber and cars, have been met with fierce opposition from provinces, most of which have pulled American alcohol from their shelves in protest.

The move has been painful for US distillers, who say the boycott has contributed to a significant decline in sales.

Greer said Americans want American spirits back on Canadian shelves if the USMCA is renewed.

Most provinces, with the exception of Alberta and Saskatchewan, have stopped selling liquor in the United States.

Canada's largest province, Ontario, defiantly boycotted, and Premier Doug Ford said the products would not hit shelves until a tariff deal was reached or the USMCA was renegotiated.

Greer's note to Congress briefly mentions several other US irritants.

These include, according to the Americans, “discriminatory procurement measures” in Ontario, Quebec and British Columbia, as well as “complicated customs clearance” of American exports to Canada.

Greer also outlines another issue – what he called Alberta's “unfair treatment” of electricity providers in Montana.

This stems from a report released in April by the Office of the U.S. Trade Representative that accused Alberta's non-profit electric grid operator of blocking Montana power producers from accessing the Alberta market.

The Alberta government denied this, saying in April that they do not treat generators differently in the US.

Alberta Utilities Minister Nathan Neudorf told reporters at the time that this was likely a problem for the U.S. because Alberta has imported less energy from Montana in recent years.

According to the Alberta Electric System Operator's 2024 report, Montana is still a net exporter of electricity to Alberta, and Alberta imports more electricity from the U.S. state than from nearby Canadian provinces.

Neudorf acknowledged earlier this year that this is a “long-standing issue” between the two neighbors, but said Alberta is committed to its trade obligations and relationship with Montana.