Canada is approaching a defining economic moment.
U.S. President Donald Trump has made greater access to Canada’s dairy market one of his stated expectations for a CUSMA renewal. Ottawa’s response has been swift and defensive. Prime Minister Mark Carney said this week that supply management would remain untouched. In truth, he had little choice—unless he was prepared to trigger a political confrontation with one of the most powerful industries in the country.
That confrontation would not be trivial. Canada’s dairy sector is among the most politically organized and disciplined in the economy. It understands leverage. It knows how to mobilize pressure, shape public narratives, and marginalize dissent. Politicians are acutely aware of this reality. Many academics are too. Most Canadians, however, remain largely unaware of how forcefully the system defends itself.
I have seen it repeatedly—in politics, in public debate, and within academia itself. Question supply management too openly and reputations suddenly become fragile. Silence, by contrast, is rewarded. Over time, that silence has allowed the system to harden, even as the rest of the industrialized world moved on.
This is why Trump’s focus on Canadian dairy is not merely transactional. It is, in his view, a matter of principle.
Outside Canada, supply management is increasingly difficult to explain or defend. It relies on production quotas, import controls, and administered prices—tools that resemble central planning more than modern market governance. Every major Western economy abandoned such systems decades ago. Canada did not. For trade partners, the disconnect is glaring.
Canadians themselves caught a rare glimpse behind the curtain several years ago during the Buttergate controversy. The revelation that palm oil–based feed supplements were being used to manipulate butterfat levels—and alter the quality of butter—briefly forced the industry into the public spotlight. The practice was halted, but accountability was limited and transparency fleeting. The episode reinforced a deeper truth: scrutiny is temporary, but opacity is structural.
That opacity extends to how supply is managed. A joint Dalhousie University–McGill University study estimates that Canadian dairy farmers discard anywhere from hundreds of millions to as much as one billion litres of milk each year, not because of food safety concerns, but to prevent oversupply and maintain elevated prices. To put that scale in perspective, one billion litres would fill roughly 533 Olympic-size swimming pools. In a country grappling with food affordability, the deliberate destruction of food on that scale is increasingly difficult to justify—and even harder to defend publicly.
The same logic permeates how dairy market access is administered under CUSMA. Tariff Rate Quotas are intended to balance domestic protection with trade commitments. In practice, they have become instruments that reinforce concentration. Access is structured in ways that advantage large incumbents while sidelining small and mid-sized processors, distributors, and retailers—the very firms that tend to drive innovation, competition, and price discipline.
Even when access exists on paper, much of it remains commercially unusable. Restrictive rules and administrative design choices ensure that quotas go unfilled while prices remain high. This is not a failure of markets. It is a consequence of policy design.
From Washington’s perspective, this looks less like compliance and more like obstruction. Trump’s frustration is not about overwhelming Canada with American milk. It is about a system that appears deliberately engineered to resist competition while claiming adherence to trade rules.
What Ottawa continues to avoid acknowledging is that reform does not require dismantling supply management or abandoning farmers. It requires modernizing how the system operates. Adjustments to quota administration, allocation rules, and usability could improve competition, utilization, and affordability—without increasing overall market access.
These are pragmatic, evidence-based reforms. They are not ideological. Yet even modest change has been treated as untouchable.
Meanwhile, Canadian taxpayers have transferred billions of dollars to dairy producers as compensation for trade agreements, even as asset values in the sector have continued to rise. The narrative of perpetual vulnerability no longer aligns with economic reality, but it remains politically effective.
Which brings us back to Trump.
The uncomfortable irony is that the only political figure with sufficient leverage to challenge Canada’s dairy orthodoxy is not Canadian. His name is Donald J. Trump. And he is doing what successive Canadian governments have refused to do: forcing the issue.
Canada now faces a choice. It can continue defending a system designed for another era—one that prioritizes inertia over competition and opacity over accountability. Or it can begin the difficult but necessary work of reforming a protected sector in a way that supports affordability, innovation, and economic resilience.
We had this opportunity twenty years ago. We took the easy road.
This time, the decision may no longer be ours alone.
