In negotiations with the Trump administration to avert the threat of massive tariffs, our political leaders say that “everything” is on the table … except for one teeny-tiny little massive crony capitalist protection racket that we are apparently willing to destroy the entire national economy to preserve:
Unfortunately, Canada’s stubborn intransigence on a significant trade-related issue once again threatens to undermine our position and, with it, the possibility of a deal. I probably don’t have to tell you, but in case you couldn’t guess … yup. It’s the dairy sector.
At this point it should be noted that there are basically two agricultural industries in Canada. One of those industries relies heavily on exports, has thrived under the various free-trade deals Canada has been party to, and is filled with dread at the prospect of U.S. tariffs. Given the obvious significance of the U.S. as an export market for Canadian goods, one doesn’t have to look too far to find all kinds of nervous folks in these industries. For example, nearly $9 billion in agricultural products were exported to the U.S. in 2023 from just Alberta alone. Beef exports represent about a third of that total, and in fact the U.S. and Canada comprise the world’s largest two-way trade in beef and live cattle. There is much at stake here (pardon the terrible pun).
The other agricultural industry in this country, is, of course, the supply managed sector. That’s dairy, as noted above, but also eggs and poultry. The supply managed sectors of the agricultural industry are governed by a system of quotas, price controls, and sky-high tariffs. It’s essentially a legalized cartel system. This sector not only wants nothing to do with free trade, but actually sees free trade as a threat. To them, “tariff” is not a dirty word because they hide behind a shield of tariffs that are far higher than anything Trump has ever threatened or conceived.
Now, it should also be noted that these two sides of the agricultural sector are vastly different in size and importance. Yet, the vocal and irrational demands of the small, sheltered component seem to be the demands that our politicians remain most beholden to. Consider comments made recently by the contenders for the Liberal leadership: during this week’s debate, nearly all of them bent over backwards to declare fealty to supply management, even while expounding upon the existential threat posed by Trump’s tariffs. Even now, it’s clear that our politicians are afraid to pick this fight.
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While that could have been a wake-up call for Canada, we instead went in the other direction. In the aftermath of the U.K. situation, Parliament went ahead and passed Bill C-282, which would enshrine into law the principle that supply management should never be on the table in any trade talks (the bill ended up being bogged down in the Senate and its future is unclear).
It’s naïve in the extreme to think that any trading partner, including and especially the Americans, would simply shrug and say “Well, shoot, that’s too bad. Let’s move onto other issues.” We’re needlessly harming our position even before talks begin.
