Since returning to the White House in 2025, President Trump has reignited his battle against Canada’s dairy system, calling it unfair to U.S. farmers. With tariffs as high as 298% and trade tensions boiling over, milk has become a weapon in international politics. What’s at stake for farmers and consumers?

Since storming back into the White House, President Trump has reignited his crusade against Canada’s dairy system. It’s a battle setting US farmers against Canadian farmers and turning a simple glass of milk into a political powder keg. Why is the most powerful man in the world so worked up about Canadian cheese? How did milk become a weapon in international trade wars? Let’s look at how it works and why it’s become even more controversial during Trump’s second term. 

How Canada’s Dairy System Works 

Canada’s dairy system operates based on three primary rules: 

1. Controlling Production: The Canadian Dairy Commission (CDC) determines how much milk Canada needs and instructs farmers on production levels, helping to keep prices steady. For instance, if Canadians are projected to drink 100 million liters of milk the following year, farmers will be directed to modify their production levels to prevent excess or shortages.
2. Setting Prices: The CDC sets minimum prices for milk to ensure farmers earn a sustainable income irrespective of market fluctuations. For example, if it costs $1 to produce a liter of milk, the CDC might set the price at $1.20, ensuring farmers can make a living.
3. Limiting Imports: Canada places significant taxes on imported dairy products, with tariffs as high as 298% for butter. This makes it difficult for foreign dairy companies to compete with Canadian products. For example, if American butter costs $3 per pound, it might cost $12 after taxes in Canada, discouraging consumers from purchasing it.

This system aims to maintain the sustainability of Canadian dairy farms and guarantee a consistent milk supply for Canadian consumers. 

Trump’s Renewed Attack on Canadian Dairy 

“In Canada, what they’ve done to our dairy farm workers is a disgrace. It’s a disgrace,” Trump said in the Oval Office in April 2017

Since Trump’s return to office, he has intensified his criticism of Canada’s dairy policies. His main grievances include: 

1. Unfair to U.S. Farmers: Trump argues that Canada’s high import taxes unfairly prevent American dairy products from being sold in Canada, pushing for equal opportunities for U.S. dairy farmers.
2. Oversupply Issues: Limited access to Canada exacerbates the oversupply and low-price challenges U.S. dairy farmers face. In states like Wisconsin, excess milk often has to be discarded due to insufficient market demand.
3. Trade Negotiations: Trump is leveraging the dairy issue in broader trade discussions, suggesting repercussions if Canada doesn’t open its market to more U.S. products. He has even threatened to impose tariffs on Canadian goods if the dairy system isn’t reformed.

“Canada charges the U.S. a 270% tariff on Dairy Products! They didn’t tell you that, did they? Not fair to our farmers!” Donald Trump Tweet.

Recent Developments Under Trump 

Trump’s return has led to notable developments: 

• Executive Orders: Trump has issued several orders affecting trade and military policies, indicating a stricter stance on trade. He has mandated reviews of all trade agreements to verify their fairness to the U.S.
• USMCA Renegotiation: Trump seeks to renegotiate the United States-Mexico-Canada Agreement (USMCA), which could threaten Canada’s dairy protections, asserting that the current agreement inadequately supports U.S. farmers.
• Increased Pressure: Trump’s administration has intensified efforts to dismantle Canada’s supply management system, elevating it to a critical issue in bilateral discussions. Trump frequently raises the topic of dairy in meetings with Canadian officials.

Impact on the Canadian Dairy Industry 

The renewed pressure from the Trump administration is causing concern in Canada’s dairy sector: 

• Uncertainty: Canadian dairy farmers are worried about potential changes to the system that could threaten their livelihoods. Many are concerned that they may not remain competitive if the market permits an influx of U.S. dairy products.
• Policy Challenges: Canada’s recent Bill C-282, aimed at protecting supply management from trade deal concessions, may face challenges under increased U.S. pressure, particularly in maintaining its objectives. This law was meant to prevent Canada from giving up more of its dairy market in trade talks, but Trump’s administration is pushing hard against it.
• Price Adjustments: Despite global influences, the CDC revealed a slight drop in farmgate milk prices for 2025, attributing it to reduced feed expenses and stable farm costs. This shows that the system is still balancing farmer income with consumer prices.

How it Affects Consumers 

The dairy system has both positive, such as ensuring a steady supply, and adverse effects, like higher prices, on Canadian consumers: 

• Higher Prices: Canadians generally pay more for milk and cheese than Americans. A family in Canada might spend $100 more per year on dairy products than a similar family in the U.S.
• Steady Supply: The system ensures that there’s always enough milk, even when prices change in other countries. Canadians don’t have to worry about milk shortages.
• Limited Variety: Due to the high taxes on foreign dairy, Canadians may have limited access to foreign cheeses and other dairy products in local stores. Some fancy European cheeses, for example, might be very expensive or hard to find.

Global Context 

It’s helpful to look at how other countries handle their dairy industries: 

• The U.S. has a more competitive market, resulting in lower prices for consumers; however, it can also create challenges for farmers when there is an excess of milk.
• New Zealand removed its protections for dairy farmers in the 1980s. Currently, New Zealand primarily exports its milk to other nations. This benefits New Zealand’s economy, but it also results in heavy reliance on other countries purchasing their milk.
• Australia removed its protections in 2000, leading to many small farms leaving business. Presently, Australia needs to bring in certain dairy products from other countries.

Possible Future Scenarios 

Looking ahead, there are several ways Canada’s dairy system might change: 

1. Gradual Opening: Canada could slowly allow more foreign dairy products into the country over many years, giving Canadian farmers time to adapt.
2. Focus on Exports: Canada could explore selling more dairy products to other nations, including New Zealand. This would require Canada to compete in the international market.
3. Technological Advancements: Canadian farms could invest in new technologies, such as robotic milking systems, to become more efficient and competitive.
4. Environmental Focus: Future changes could focus on enhancing the environmental sustainability of dairy farming, such as reducing greenhouse gas emissions from cows.
5. Consumer-driven Changes: As more people want organic milk or plant-based alternatives, the system might change to support these products.

The Bottom Line 

The battle over Canada’s dairy system concerns more than milk; it’s a fight over trade, livelihoods, and the future of farming. Trump’s push to dismantle Canada’s protections offers hope for new markets for U.S. farmers. Still, it questions whether they can thrive in an increasingly competitive global industry. For Canadian farmers, the system that has provided stability for decades is under siege, leaving them to wonder if gradual reforms or rapid changes will define their future.

Despite the tension, U.S. and Canadian farmers share common ground: a passion for their work and a commitment to feeding millions. As this trade war rages on, perhaps the real opportunity lies in collaboration. Could farmers on both sides of the border work together to address shared challenges like climate change, shifting consumer demands, and the rise of dairy alternatives?

The future of North American dairy is uncertain, but one thing is clear: the decisions made now will shape the industry for generations to come. Whether you’re milking cows in Wisconsin or Quebec, it’s time to think beyond borders and find a path that supports farmers, consumers, and the sustainability of dairy farming itself.

Key Takeaways:

• The Canadian dairy supply management system is grounded on three pillars: production control, pricing mechanisms, and import control.
• While the system stabilizes Canadian farmers, it increases consumer prices and stifles competition and innovation.
• U.S. farmers, mainly impacted by overproduction and low prices, view Canada’s protected market as unfairly limiting their export opportunities.
• Despite recent trade agreements, Canada has maintained the core structure of its supply management, with only minor adjustments.
• Critics call for reform, highlighting inefficiencies, high consumer costs, and the need for increased market competitiveness and innovation.

Summary:

Canada’s dairy supply management system has stirred controversy, particularly with U.S. trade advocates. It keeps Canadian prices high and blocks foreign competition to help Canadian farmers. Former U.S. President Donald Trump was vocal about it, saying it unfairly stops U.S. dairy from entering Canada and hurts U.S. farmers. Although some trade deals have pushed Canada to open its dairy market, critics say the system is outdated, inefficient, and blocks new ideas. With global trade changing, Canada might need to update its dairy policies for better prices and international fairness.

Learn more:

• American Dairy Farmers Grapple with Trade War and Immigration Policies: The Fight to Stay Afloat
• Trump vs Biden: Who is the Best Presidential Choice for Dairy Farmers?
• North American Dairy Trade: US-Mexico Relations Strengthen Amid Canada’s Growing Trade Tensions

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