The Canadian and American dairy policies and structures are briefly compared. An explanation of the Canadian and American dispute on dairy trade followed. Finally, the possible trade prospects are assessed. It was found that if Canada was to win the dairy trade dispute the level of trade between the two countries is not expected to grow much over the next five years. In the event that the United States wins the trade dispute, Canada will have to open its domestic market and still pay prohibitively high tariffs when exporting to the United States. Trade distortion, and much lower price at the farm level in Canada would result, as suggested by a previous study.