Trump's CUSMA Ultimatum Puts Canadian Dairy Supply Management at Risk

President Donald Trump has made it clear that altering Canada's supply management system is non-negotiable for the 2026 North American trade review. This system, which governs the production and pricing of dairy, poultry, and eggs in Canada through high tariffs, has been a longstanding issue for U.S. exporters seeking more access to the Canadian market.

The 2026 'sunset clause' of CUSMA requires all three member countries to agree to extend the trade agreement for another 16 years. Trump's approach suggests that mere renewal is not an option, framing the review as a chance for renegotiation. The U.S. administration is pressuring Ottawa to choose between maintaining domestic agricultural stability and the benefits of broader North American trade.

Previous USMCA negotiations highlighted the sector's sensitivity. While the agreement allowed U.S. farmers more access to the Canadian dairy market, American officials claim Canada has not fully implemented these changes. Trump's emphasis on 'fairness' in agricultural trade suggests the U.S. will demand further concessions, potentially challenging the viability of Canada's supply management model.

The uncertainty surrounding the review creates a complex climate for investment in manufacturing and exports. If a consensus is not reached, the agreement could expire, leading to high-tariff unpredictability. Although Canadian officials are committed to defending their agricultural policies, the U.S. market's size grants Trump considerable leverage.

The international dairy sector is closely monitoring diplomatic actions between Washington and Ottawa. The 2026 review's outcome will hinge on Canada's willingness to compromise on dairy and the U.S.'s readiness to risk for full market access.