U.S. tariffs would have little effect on Canada's 'cartelized' dairy industry, experts say

The thought that imaginable U.S. tariffs connected Canadian dairy products could importantly interaction the country's protectionist strategy smells a spot disconnected to immoderate experts.

U.S. President Donald Trump has repeatedly torn into Canada's dairy manufacture passim his clip successful the Oval Office. Earlier this month, helium mischaracterized Canada's dairy commercialized nether the Canada-U.S.-Mexico Agreement (CUSMA) — a woody helium negotiated.

Trump said Canada charges much than 200 per cent tariffs connected U.S. dairy products, but helium did not notation that the precocious Canadian tariffs lone use if the agreed tariff-rate quotas connected U.S. dairy imports nether CUSMA are reached oregon exceeded.

Canada's proviso absorption strategy for dairy, ovum and poultry tin beryllium a "trade irritant" among the country's large trading partners, arsenic it excludes akin products made by those partners from the Canadian market, according to Ryan Cardwell, an cultivation economics prof astatine the University of Manitoba.

"If much American supply-managed products were allowed into Canada, that would effect successful little prices and astir apt wider enactment of products successful Canada," helium told CBC News. "But to beryllium honest, I don't truly expect overmuch of that happening anytime soon."

The proviso absorption strategy is highly protected and "cartelized," arsenic it controls the country's production, pricing and imports of dairy, ovum and poultry products, helium said.

That's wherefore Cardwell is skeptical that U.S. tariffs connected Canadian dairy products could harm Canada's proviso absorption system.

"If the United States were to enactment successful spot a tariff connected Canadian dairy products, [it would] truly not bash anything, due to the fact that the United States marketplace doesn't import overmuch Canadian dairy anyway."

Canada exported astir $350 cardinal worthy of dairy products to the U.S. successful 2024 — 3.5 per cent of which came from Manitoba, Statistics Canada information shows. Dairy merchandise manufacturing accounted for 12 per cent of Manitoba's nutrient manufacturing income past year, the state said.

However, Canada imported astir $880 cardinal successful U.S. dairy products past year, the information shows. It has besides consistently tally a dairy commercialized shortage with the U.S. each twelvemonth implicit the past decade.

A nationalist selling bureau determines however overmuch of each merchandise should beryllium made, and sets accumulation quotas for each province, according to a 2018 Library of Parliament study.

Farmers indispensable clasp a quota — which prevents overproduction that tin origin terms dips and disrupt workplace incomes — successful bid to merchantability their products. Supply-managed producers are guaranteed a minimum terms for their products.

Another marketplace 'breach' possible

The quota strategy allows Canada's dairy, poultry and ovum sectors to bounds the proviso of their products to what Canadians are expected to consume.

Cardwell encourages Canadians to see who benefits astir nether the existent system.

"If you're a producer, you deliberation it's large and you privation to support it. If you are a user who would payment from little prices, you whitethorn wonderment wherefore this argumentation is successful place," helium said.

David Wiens, president of Dairy Farmers of Canada, says the U.S. gained greater entree to Canada's dairy marketplace astatine the nonstop disbursal of its farmers.

"We telephone upon our national and provincial governments to support our economy, and to safeguard our nationalist nutrient information and sovereignty," helium wrote successful an emailed statement.

The manager of McGill University's workplace exertion and absorption programme besides predicts that U.S. tariffs connected Canadian dairy products would person a "somewhat limited" interaction connected industry.

"What I'm truly acrophobic astir is that [Trump] volition effort to get another, yet another, breach successful our proviso absorption system," Pascal Thériault told CBC News.

During the renegotiation of the North American Free Trade Agreement (NAFTA) successful 2018, the Trump medication sought to person Canada bash distant with its decades-old proviso absorption system.

Instead, Canada provided caller tariff complaint quotas exclusive to the U.S. nether the Canada-US-Mexico (CUSMA) commercialized agreement. The U.S. gained greater marketplace entree successful Canada for its products, with Canada agreeing not to use tariffs connected definite amounts of U.S. dairy merchandise imports per year.

Thériault worries that the U.S. volition question much country for its beverage successful the Canadian marketplace erstwhile CUSMA goes nether reappraisal successful 2026.

"If we indispensable fto successful much product, it means that we're removing accumulation close from our ain farmers," helium said.

Thériault wants Canadians to retrieve that galore agrarian economies trust heavy connected tiny dairy and poultry farms, arsenic good arsenic ovum producers.

"Those are tiny businesses that support our villages, our tiny towns, running," helium said. "Should we suffer those smaller farms, yet it's our full agrarian scenery that would get wounded retired of it."

The powerfulness lies successful the hands of consumers astatine the extremity of the day, due to the fact that because companies are little apt to import a caller merchandise specified arsenic U.S. dairy if nary 1 buys it, helium said.

However, Thériault doesn't judge the U.S. dairy manufacture has overmuch to summation adjacent if it did get greater entree to the Canadian market. The authorities of Wisconsin produces much beverage than each of Canada each year, flooding the American marketplace with a assortment of products, helium said.

"Thinking you volition unfastened the Canadian marketplace to U.S. milk and it volition lick the U.S. farmers' occupation successful dairy, doesn't stand."

The quality comes arsenic the U.S. precocious boosted its dairy processing and accumulation capacity, says Leonard Polzin, a dairy economist astatine the University of Wisconsin-Madison.

The dairy terms cycle in the U.S. is expected to deed a downward inclination astatine the extremity of 2025 and into adjacent year, helium says.

"It means the lone mode we tin get escaped of this merchandise is successful that planetary market," helium said. "So adjacent without tariffs, we were already expecting to spot terms decreases."

Potential U.S. tariffs connected Canadian dairy products besides airs a information to American farmers, Polzin says, due to the fact that Canada could deed backmost with reciprocal tariffs.

Historically, planetary buyers person been known to question different markets erstwhile their commercialized narration with the U.S. is interrupted, helium said.

"Even if the tariffs are lifted, you know, they don't conscionable leap vessel from those relationships and travel backmost to the U.S."

"I don't deliberation that from, let's accidental the husbandman to husbandman level, that that cognition oregon narration is truly changing," helium said.

"There's inactive an atrocious batch of goodwill and, continued anticipation for a affirmative narration … but the governmental clime is possibly not helping to facilitate that."