What Trump gets wrong about Canada-U.S. dairy trade

Once again, U.S. President Donald Trump lambasted Canada on Wednesday — this time, for allegedly imposing exorbitant tariffs on dairy products.

Those claims, made during a White House visit from the Irish prime minister, come less than a week after he mischaracterized the Canada-U.S.-Mexico Agreement (CUSMA) — a deal he negotiated — making an important omission while stating that Canada is charging more than 200 per cent tariffs on dairy products.

Here's an overview of Canada-U.S. dairy trade, addressing points the president has recently called into question.

During the North American Free Trade Agreement (NAFTA) renegotiations in 2018, the Trump administration sought to have Canada do away with its decades-old supply management system.

It is a national policy framework meant to ensure predictable and stable prices by guaranteeing supply-managed farmers a minimum price for their products.

American dairy farmers argued that the way the Canadian government allocates its tariff-free dairy import permits denies them full access to the 3.5 per cent share of Canada's market they thought they'd gained in CUSMA, the revised NAFTA.

Canada's supply management system relies on the control of imports and enables the dairy, poultry and egg sectors to limit the supply of their products to what Canadians are expected to consume.

Under both CUSMA and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with Pacific Rim dairy exporters like New Zealand, Canadian dairy processors effectively control what enters their market.

Both the U.S. and New Zealand have taken aim at the supply management system through the dispute settlement processes in their respective trade agreements.

U.S. farmers have access to various federal subsidy programs, such as the Dairy Margin Coverage and Dairy Revenue Protection programs, which help them withstand volatile markets.

When CUSMA came into force on July 1, 2020, it included a new requirement for a review in six years. CUSMA has a sunset clause that will end the trade deal after 16 years unless each party commits to renewing it for another term.

Despite Trump downplaying how much of an export market Canada is for the U.S., the country has been consistently one of the top importers of U.S. agricultural products, according to the U.S. Department of Agriculture.

Last year, Canada was the second-highest importer of U.S. dairy products, buying about $1.14 billion US, and it was the United States' top export market for eggs and related products.

The department said on its website in June 2024 that Canada represents "one of our most significant and reliable trading partners."