As U.S. President Donald Trump threatens a 35 per cent tariff on Canadian exports, a consumer policy expert says Canada’s decades-old supply management regime is a core obstacle to resolving the trade dispute with the U.S.
In an interview, David Clement, North American Affairs Manager at the Consumer Choice Center, said Canada’s system of quotas and tariffs on dairy, poultry, and eggs has long been a trade irritant for American administrations, both Republican and Democrat.
“It covers dairy products, so milk, cheese, chicken, eggs, and turkey,” Clement said. “There’s a system of quota licenses to produce, which limits domestic supply, alongside high tariffs on international production.”
Those tariffs can reach up to 280 per cent on chicken, 203 per cent on dairy, and as high as 165 per cent on turkey.
Clement said that while the U.S. has repeatedly raised concerns, including under NAFTA and CUSMA, Trump’s renewed focus on the issue reflects political pressure from key swing states for Republicans, such as Wisconsin, which has a large dairy industry.
The Consumer Choice Center argues that the system inflates consumer prices by 20 to 40 per cent and creates an artificial monopoly that limits Canadians’ access to lower-priced products, including international brands.
A pre-pandemic study estimated that inflated dairy prices pushed approximately 189,000 Canadians below the poverty line, a number likely higher today.
Canada’s supply management structure is designed to serve only domestic demand, Clement said, meaning any excess production is discarded.
As a result, Canadian dairy farmers are largely shut out from the global export market, a missed opportunity, especially in growing markets across Asia.
“If we got rid of supply management, our farmers could compete globally, just like New Zealand’s dairy sector, which exports throughout Asia,” he said.
Beyond trade concerns, Clement pointed to supply management as a structural contributor to food inflation, reducing affordability and choice.
“Consumers would benefit from more competition, better variety, and lower prices,” he added.
The system also persists due to what Clement described as “the most powerful political lobby in the country.”
Dairy Farmers of Canada, a national group, is among the top advertisers in Canada and holds key influence in Quebec, where a majority of Canada’s supply-managed farms are located.
“The concentration of dairy farms in Quebec gives the issue outsized political weight. Quebec is always a battleground in federal elections,” he said.
Clement said Prime Minister Mark Carney now faces a major test.
“He campaigned as a leader willing to make tough decisions. Whether he’ll apply that to supply management is an open question.”
Calls to phase out or reform the policy are growing louder as Canada faces increasing pressure to finalize a new trade agreement with the U.S. by August 1 or face sweeping tariffs.