Next U.S. Trade Battle Could Be Milked in Canada's Dairy Barns
The federal government and the Canadian dairy industry are vowing to protect the country’s supply management system in the face of threats from the United States.
Amid U.S. tariff threats, a fight may be brewing over Canadian supply management. Earlier this week, U.S. President Donald Trump voiced discontent about American access to Canadian dairy markets, which was a major sticking point in North American free-trade negotiations during his first term in office.
Prime Minister Justin Trudeau announced he had reached an agreement to pause proposed 25 per cent tariffs on Canadian exports for at least 30 days, in exchange for commitments to beef up border security and fight the fentanyl trade. “We will certainly see a fight. It will be a titanic battle,” said Lawrence Herman, an international lawyer and senior fellow at the C.D. Howe Institute.
Canada's system of supply management for dairy, poultry, and eggs, established starting in the 1970s after a period of price volatility, functions by setting production quotas for farmers, guaranteeing minimum prices, and maintaining import controls.
Howard Lutnick, Trump’s pick to lead the Commerce Department, took aim at the dairy industry during a Senate confirmation hearing, claiming that Canada treats American dairy farmers unfairly. Foreign Affairs Minister Mélanie Joly emphasized Canada's commitment to defending its dairy producers, highlighting that the Liberal party has long supported supply management.
Luc Boivin, general manager of Fromagerie Boivin, argued that some elements of the system require modernization to meet the changing international landscape. Despite previous concessions in trade agreements, including the allowance of U.S. dairy farmers access to 3.5 per cent of the Canadian market, tensions remain.
Jodey Nurse from McGill Institute expressed concern that scrapping supply management would overrun Canadian markets with American products, potentially overwhelming Canada's producers. She believes the continued dialogue will likely embolden Canadians to hold firm on maintaining their dairy sector's stability and integrity.
