The supply management system is highly protected and “cartelized,” as it controls the country’s production, pricing and imports of dairy, egg and poultry products, he said.

That’s why Cardwell is skeptical that U.S. tariffs on Canadian dairy products could damage Canada’s supply management system.

“If the United States were to put in place a tariff on Canadian dairy products, [it would] really not do anything, because the United States market doesn’t import much Canadian dairy anyway.”

Canada exported about $350 million worth of dairy products to the U.S. in 2024 — 3.5 per cent of which came from Manitoba, Statistics Canada data shows. Dairy product manufacturing accounted for 12 per cent of Manitoba’s food manufacturing sales last year, the province said.

However, Canada imported about $880 million in U.S. dairy products last year, the data shows. It has also consistently run a dairy trade deficit with the U.S. each year over the last decade.

A national marketing agency determines how much of each product should be made, and sets production quotas for each province, according to a 2018 Library of Parliament study.

Farmers must hold a quota — which prevents overproduction that can cause price dips and disrupt farm incomes — in order to sell their products. Supply-managed producers are guaranteed a minimum price for their products.

Another market ‘breach’ possible

The quota system allows Canada’s dairy, poultry and egg sectors to limit the supply of their products to what Canadians are expected to consume.

Cardwell encourages Canadians to consider who benefits most under the current system.

“If you’re a producer, you think it’s great and you want to keep it. If you are a consumer who would benefit from lower prices, you may wonder why this policy is in place,” he said.

David Wiens, president of Dairy Farmers of Canada, says the U.S. gained greater access to Canada’s dairy market at the direct expense of its farmers.

“We call upon our federal and provincial governments to defend our economy, and to safeguard our national food security and sovereignty,” he wrote in an emailed statement.

The director of McGill University’s farm technology and management program also predicts that U.S. tariffs on Canadian dairy products would have a “somewhat limited” impact on industry.

“What I’m really concerned about is that [Trump] will try to get another, yet another, breach in our supply management system,” Pascal Thériault told CBC News.

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

Instead, Canada provided new tariff rate quotas exclusive to the U.S. under the Canada-US-Mexico (CUSMA) trade agreement. The U.S. gained greater market access in Canada for its products, with Canada agreeing not to apply tariffs on certain amounts of U.S. dairy product imports per year.

Thériault worries that the U.S. will seek more room for its milk in the Canadian market when CUSMA goes under review in 2026.

“If we must let in more product, it means that we’re removing production right from our own farmers,” he said.

Thériault wants Canadians to remember that many rural economies rely heavily on small dairy and poultry farms, as well as egg producers.

“Those are small businesses that keep our villages, our small towns, running,” he said. “Should we lose those smaller farms, ultimately it’s our whole rural landscape that would get hurt out of it.”

The power lies in the hands of consumers at the end of the day, because because companies are less likely to import a fresh product such as U.S. dairy if no one buys it, he said.

However, Thériault doesn’t believe the U.S. dairy industry has much to gain even if it did get greater access to the Canadian market. The state of Wisconsin produces more milk than all of Canada each year, flooding the American market with a variety of products, he said.

“Thinking you will open the Canadian market to U.S. milk and it will solve the U.S. farmers’ problem in dairy, doesn’t stand.”

The dispute comes as the U.S. recently boosted its dairy processing and production capacity, says Leonard Polzin, a dairy economist at the University of Wisconsin-Madison.

The dairy price cycle in the U.S. is expected to hit a downward trend at the end of 2025 and into next year, he says.

“It means the only way we can get rid of this product is in that international market,” he said. “So even without tariffs, we were already expecting to see price decreases.”

Potential U.S. tariffs on Canadian dairy products also pose a danger to American farmers, Polzin says, because Canada could hit back with reciprocal tariffs.

Historically, international buyers have been known to seek other markets when their trade relationship with the U.S. is interrupted, he said.

“Even if the tariffs are lifted, you know, they don’t just jump ship from those relationships and come back to the U.S.”

“I don’t think that from, let’s say the farmer to farmer level, that that perception or relationship is really changing,” he said.

“There’s still an awful lot of goodwill and, continued hope for a positive relationship … but the political climate is maybe not helping to facilitate that.”

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