'It's like Groundhog Day': Canadian dairy producers are used to Trump calling them out, but worry remains
Experts say some supply management concession might be necessary for a trade deal
Dairy producers say they're used to U.S. President Donald Trump's jabs at their industry, as he threatens yet another round of tariffs on Canada. But they're still worried about what the continued threats could mean for the supply management system that protects them.
In a letter posted to Truth Social last night, Trump threatened Canada with a 35 per cent blanket tariff starting Aug. 1. The letter also specifically called out the dairy industry.
"Canada charges extraordinary tariffs to our dairy farmers — up to 400 per cent — and that is even assuming our dairy farmers even have access to sell their products to the people of Canada."
The claims — though not entirely accurate — refer to Canada's supply management system, with which Trump has long taken issue. In short, Canada controls imports across a few sectors including dairy, poultry and eggs. There are also limits to how much Canadian producers can make of a given product, and how much U.S. producers can send here.
American dairy producers' exports are allowed to make up about 3.5 per cent of Canada's dairy market right now, though the rates vary depending on the exact product.
If they go over that quota, then they're tariffed at a high rate. Those rates also depend on the product, but for butter, for example, a 298.5 per cent levy applies for 2025, while the figure for cheddar cheese is 245.5 per cent. None of the surplus dairy tariff rates go as high as 400 per cent, however, as the president said. The cap is in place to ensure American dairy, which its government heavily subsidizes, doesn't flood the Canadian market.
Dairy producers worry about supply management
Philip Armstrong, partner at Armstrong Manor Farm in Caledon, Ont., says the threats against dairy feel like Groundhog Day, given how often Trump brings them up.
"Dairy seems to sit in his brain," Armstrong said. "So we've kind of got immune to it.… There's not much you can do about [the threats]."
However, it's still troubling, Armstrong says, because he fears that Canada will make concessions on the supply management system in trade negotiations.
Despite what some critics of the program say, Armstrong says supply management helps support the dairy industry. The U.S. government directly subsidizes its dairy producers — supply management is simply Canada's way of supporting its own industry.
"Every country in the world has a scheme or a program or something to support and protect their own industries."
Given the size and subsidies of the U.S. dairy industry, Armstrong says if there were no import controls at all, "they'd just swamp us" with their exported dairy.
Ottawa has been steadfast in saying the supply management system is not up for negotiation, either.
"I think the fact that the prime minister is so clear offers some reassurance," said Tyler McCann, managing director at the Canadian Agri-Food Policy Institute.
But that doesn't necessarily put dairy farmers in a comfortable position, he says, as producers worry that any increased access to the Canadian market for American companies could hurt their businesses.
Should supply management — and dairy — be on the negotiating table?
Colin Mang, an economist at McMaster University, says that protecting Canada's dairy industry requires some kind of boost. And Canada simply can't afford to heavily subsidize farmers like the U.S. does, which means supply management is our only option, he says.
Still, it's likely the government will need to make some kind of concessions.
"The hope has always been that we could protect certain bits of [industries] without compromising the others," Mang said. "This American administration does not seem to be willing to accept that. And as a result, the Canadian government is going to have some very difficult decisions to make."
He says the best option might be allowing a bit more American dairy onto Canadian shelves, while still protecting Canadian dairy farmers.
The government did sign a bill into law in late June meant to protect supply management from becoming a pawn in trade negotiations. But Mang says the text doesn't have much protection power because any new trade deal with the U.S. will have to be put to Parliament, overriding past legislation.
Carlo Dade, director of international policy at the University of Calgary's School of Public Policy, agrees that concessions on supply management might need to be made.
While every country has certain industries it protects, Canada is more dependent on imports than many other nations.
"So we're really not in a position to be able to afford the luxury that you may see some other countries [take]."
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