Trump targets supply management

Brenda O’Farrell
The Advocate

Few things are clear in the expanding tariff war being waged by U.S. President Donald Trump, especially in Canada, where weeks of threats are being followed by a dizzying string of flip-flops and pauses, more threats of retaliatory counter-measures, annexation overtures and “colourful” phone calls between Ottawa and Washington, as Justin Trudeau described them.

But when it comes to the impacts on the agricultural sector, one result is crystal clear: Farmers on both sides of the border are experiencing a cocktail of emotions as the agricultural sector braces for impact.

As UPA president Martin Caron put it: “Our discussions with agricultural organizations in the United States show that there is discontent on both sides of the border.”

Caron is a member of the Council on Canada-U.S. Relations appointed by Trudeau in January to help formulate and steer Canada’s response to tariff threats.

But now, tariffs may not be the only issue.

Hidden in Trump’s focus on dairy tariffs is the growing concern, especially in Quebec, that the real threat is that the U.S. government wants to dismantle Canada’s supply-management system at the centre of Canada’s dairy sector.

Canada conceded ground on supply management in the last round of negotiations that led to the Canada-U.S.-Mexico Agreement signed by Trump during his first term. At that time, federal officials in Canada compensated dairy farmers for allowing the U.S. limited access to our dairy market. And they vowed that would be it.

But Trump appears to want more now.

Yes, as the tariff war ratcheted up in February and early March, federal officials, including Innovation, Science and Industry Minister François-Philippe Champagne, in early March pledged their support to protect the system.

Speculation over whether it is worth protecting, however, persists.

During the CUSMA negotiations, the first Trump administration argued Canada’s supply management system unfairly limited U.S. access to this country’s dairy market. Yet, despite reaching a deal, the loosened access still annoys Trump. But his criticisms do not reflect the reality of what is actually happening.

His very public gripes and threats to impose a 250-per-cent reciprocal tariff on Canadian dairy entering the U.S. grabs headlines, but observers say all that bluster – even if he carries through with the threat – will have little impact.

So far, U.S. dairy producers have not come close to hitting the threshold that would trigger a tariff under the existing CUSMA deal.

Then there is the other fact that Trump opts to ignore: Canada exports less dairy products to the U.S. than it imports from the U.S., meaning Canada posts a trade deficit when it comes to dairy.

But that is not the only concern. The U.S. is not the only country that has raised issues with Canada’s supply-management system. And as Canadian officials look to diversify their trading deals with other countries around the globe, the issue could again draw criticism.