Got Trade? Dairy Farmers Stand to Gain From the USMCA Under NAFTA, U.S. dairy farmers were left behind because Canada restricted how much U.S.

milk it imports. Under the USMCA, U.S. dairy farmers will be able to sell three times as much to Canadian markets as they could before. Canada has agreed to get rid of tariffs for American dairy exports.

a. What is USMCA? What is its aim?

b. In the market for milk, explain how barriers to free trade influence the quantity of milk produced and consumed in Canada. Illustrate your answer with an appropriate graph.

c. Show on your graph the changes in consumer surplus and producer surplus that result from free trade in milk

d. Explain why Canadian milk producers oppose free trade in milk with the United States.