Canada's dairy industry says tariffs less scary than threats to supply management

Canadian dairy industry members say they're less worried about the threat of steep U.S. tariffs than they are over a looming battle over supply management in eventual free trade talks. A barn cat looks over at cows as they wait to be milked at a dairy farm in Granby, Que., Wednesday, Feb. 5, 2025. THE CANADIAN PRESS/Christinne Muschi

MONTREAL — Members of Canada’s dairy industry say they’re less worried about the threat of steep U.S. tariffs than about a looming battle over supply management.

U.S. President Donald Trump has threatened to impose what he calls “reciprocal” tariffs on Canadian dairy, saying they’re a response to Canada’s 250 per cent duty on U.S. dairy imports.

Quebec farmer Markus Schnegg says nearly all the dairy produced in Canada is sold for domestic consumption, meaning the U.S. tariffs would only affect a small fraction of the market.

But he’s worried that Canada’s supply management system — which protects the industry from international competition — appears to be in the U.S. president’s crosshairs ahead of a renegotiation of the free-trade deal between the countries.

University of Guelph food economist Michael von Massow says that Canada imports far more dairy from the U.S. than it exports, which suggests an escalating dairy tariff war would hurt American farmers more than Canadian ones.

He adds that before the trade war, the U.S. dairy that Canada imported wasn’t tariffed at all because it was less than the limit agreed upon by the two countries in the existing free-trade deal. Imports above that limit face Canadian tariffs of about 250 per cent.