Ottawa avoided a trade setback. But Trump could come for supply management next

Jenna Benchetrit · CBC News

· Posted: Jul 01, 2025 4:00 AM EDT | Last Updated: 9 minutes ago

Dreams bash travel true. U.S. President Donald Trump wished for Canada's taxation connected U.S. tech companies to vanish connected Friday, and by Sunday, it had.

Mostly, determination was a consciousness of astonishment that the national authorities would play specified a invaluable paper this soon. The integer services taxation (DST), which Ottawa was expected to commencement collecting connected Monday, was unpopular with the U.S. authorities and the tech giants it targeted — Meta and Amazon, for example — and, conveniently, not was particularly liked by concern groups astatine home.

By quashing it, Canadian negotiators paid a benignant of toll connected the road to a commercialized woody with the U.S. — successful that it kept talks rolling. But the determination could backmost Canada against the partition connected the acold thornier contented of supply management. 

"I deliberation we tin expect that they volition beryllium coming aft america connected [supply management] arsenic well, due to the fact that it has been a longstanding irritant," said Fen Hampson, a prof of planetary affairs and a co-chair of the adept radical connected Canada-U.S. relations astatine Carleton University successful Ottawa.

Trump has agelong objected to Canada's supply-managed dairy system, complaining astir what helium characterizes arsenic precocious tariff rates connected U.S. dairy exports to Canada (more connected that later). He made it an contented starring up to the 2018 dialog of the Canada-U.S.-Mexico Agreement (CUSMA), but yet allowed that free commercialized woody to walk without addressing it.

Now, Trump is backmost to making a stink astir our cheese. He claimed connected Friday that Canada has charged U.S. farmers a 400 per cent tariff "for years" connected dairy products. 

WATCH | Why Trump hates dairy proviso management: 

But erstwhile it comes to dairy, Trump's privation won't travel existent truthful easily, acknowledgment to the precocious passed Bill C-202, which forbids supply absorption from being utilized arsenic a bargaining spot successful commercialized negotiations.

The measure has been criticized due to the fact that it perchance ties Ottawa's hands if the U.S. president issues an ultimatum aimed astatine Canadian dairy — by extension, threatening to disturb Parliament which has, since the national election, mostly acceptable speech partisan differences in the look of Trump's threats.

The added trouble "has surely registered with the White House," said Hampson.

'Tremendous' power

Down south, the scrapped DST was hailed arsenic a victory. Trump's commercialized typical Howard Lutnick thanked Canada for removing it, calling it a "deal-breaker for immoderate commercialized deal" with the United States, while White House economical advisor Kevin Hassett said removing the taxation paved the mode for to renew talks.

White House property caput Karoline Leavitt seemed to gloat, saying that Carney "caved" to Trump's demands and that it was a mistake for Canada to committedness the taxation successful the archetypal place.

WATCH | Carney says negotiations restarted: 

But if determination was immoderate denotation of what's to travel next, it was from Pete Hoekstra. The U.S. ambassador to Canada, speaking connected CBC's Power & Politics on Monday evening, said helium believes Carney would propulsion Parliament to put supply absorption backmost connected the array if a woody betwixt the U.S. and Canada depended connected it.

"I person a beardown content that if ... the premier curate and the president got to a commercialized agreement, and for immoderate crushed it included thing that Parliament said 'You can't bash that,' the premier curate astir apt could find a mode to get Parliament to bash [his] will," helium said.

"Prime ministers and presidents, they've got a tremendous magnitude of power."

If Trump truly wanted to enactment economical unit connected Canada, "he could effort this nonstop aforesaid maneuver and say, 'I'm going to locomotion distant until proviso absorption is gone,'" said Asa McKercher, a prof astatine the Mulroney Institute astatine St. Francis Xavier University successful Antigonish, N.S. 

Trump's galore claims astir Canada's proviso managed dairy systems are often inaccurate. High tariff rates connected U.S. dairy lone use if exports transcend acceptable quotas, and the U.S. has ne'er travel adjacent to exceeding them (one U.S. dairy lobbying enactment argues that this is due to the fact that of the "protectionist measures" imposed by Canada). Below the quotas, U.S. dairy products are tariff-free nether CUSMA.

While Canada's dairy lobby welcomed C-202's passage, immoderate cultivation manufacture leaders argue that it stifles their industries successful favour of bolstering dairy, and gives the country little wiggle country should Trump travel knocking for much concessions.

"I deliberation the Carney authorities is present getting into a presumption wherever the rubber is truly going to deed the road," said McKercher. "If you've fixed successful connected the integer tax, is that a concession that Mr. Trump volition spot arsenic a concession and accept, oregon volition Mr. Trump proceed to propulsion Canada and say, well, present what astir proviso management?"

WATCH | Supply absorption 'off the table,' says Leblanc: 

'Existential' contented for Liberals 

He says this is "dangerous territory," for the number Carney government, which needs the enactment of different parties to walk its agenda. 

"If the existent authorities looks similar it's going to present a measure threatening proviso management, this could make a batch of governmental headaches."

Bill C-202 was sponsored by Bloc Québécois Leader Yves-François Blanchet arsenic a nod to the party's basal successful Quebec wherever the dairy farming manufacture is heavy concentrated. The Conservatives are besides looking to grow successful the province, portion maintaining their agrarian basal successful Ontario.

"This is wherever the contented becomes existential for the governmental fortunes of Carney's Liberal government," said Hampson.

"So that's going to beryllium a pugnacious one. And I'm not definite there's truly immoderate mode to quadrate that ellipse if the Americans determine to spell aft america connected it."

With 3 weeks near until the July 21 deadline for a caller Canada-U.S. commercialized deal, it's imaginable that talks betwixt Trump and Carney volition scope the decorativeness line, says Lori Turnbull, a prof of governmental subject astatine Dalhousie University. 

But with Trump upset astir proviso management, "it's a question of is this going to beryllium capable for him for a small while? How long?" she said. 

"Now that we've made a concession and Trump sees that arsenic a triumph for him, is determination an accidental close present successful this abbreviated play of clip [where Canada can] determination immoderate things done wherever Trump feels similar … a existent escaped commercialized narration and a caller economical and information pact for Canada and the US is successful the American's involvement too."