Why Trump is targeting Canada’s dairy protection regime
Mar 18, 2025
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Nojoud Al Mallees, an economics reporter with The Globe and Mail, breaks down Canada’s supply management system and its entanglement in Trump’s trade war. She reveals how strict regulations shape dairy production and imports, making it a target for U.S. tariffs. The discussion dives into the impact on Canadian farmers and consumers, exploring the delicate balance between protecting local industries and the pressures of international trade. Al Mallees also raises the question of whether Canada can afford to maintain this system amid escalating trade tensions.
Trump's proposed tariffs on Canadian dairy reflect concerns about Canada's supply management system, which limits American imports and stabilizes local prices.
Critics argue that Canada's supply management results in higher consumer prices and complicates trade negotiations, posing challenges for international relations.
Deep dives
Understanding Supply Management
Supply management is a national system that regulates the production and pricing of key products like dairy, eggs, and poultry in Canada. This system is overseen by provincial marketing boards that allocate quotas to farmers, ensuring that production levels and prices are kept stable. Import controls are also a significant aspect, as tariffs on foreign dairy products can reach up to 300%, preventing excessive competition from the United States. By creating a predictable environment, supply management allows consumers to rely on a steady domestic supply of essential food items.
Impact of Tariff Threats
Trump's threats of imposing tariffs on Canadian dairy stem from concerns about the supply management system, which limits American imports while stabilizing domestic prices. Although these tariffs are significant in value, Canada's dairy industry is unlikely to feel substantial effects since it primarily meets local demand and exports minimally. The ongoing trade tensions signal a persistent frustration between the U.S. and Canada regarding dairy imports, with negotiations already impacted during previous trade agreements like KUSMA. The reciprocal tariff threats serve as a reminder that tensions surrounding dairy will continue to require navigation between both nations.
Critiques and Future of Supply Management
Critics argue that the supply management system results in higher prices for consumers and poses challenges during trade negotiations, making it a contentious point in international relations. Despite its benefits, such as price stability for both consumers and producers, research indicates that Canadians are paying more than they would in a free market environment, disproportionately affecting low-income households. Political support for the system remains robust across party lines, largely due to the influence of dairy farming regions. As trade conflicts evolve, discussions around potential concessions on supply management are likely to re-emerge, particularly in the context of seeking improved trade relations.
Canadian dairy is a recent target of U.S. President Donald Trump’s proposed reciprocal tariffs coming in April. Trump’s proposed levies are in retaliation for the sector’s massive tariffs, which apply to American imports over a certain limit. According to the International Dairy Food Association, the import limits have never been exceeded.
It’s part of a system called supply management. It controls the country’s domestic dairy production, and has strict regulations surrounding imports and exports. But some critics say it acts as a trade barrier. At a time when Canada needs to expand its relationships, can it afford to leave this system untouched?
Today, the Globe’s economics reporter Nojoud Al Mallees is on the show to explain how Canada’s supply management system works, what it means for farmers andconsumers, and why it’s become a target in Trump’s trade war.