Ottawa – A new law to protect supply management means that the Trump administration may not be enough to mold the system in business negotiations, it is bent on finishing it, saying business experts say.
“It is more difficult to make a deal with the United States of the United States to be passed with the United States of America, which basically forces Canada to interact with one hand behind his back,” said William Palerin, a business advocate and partner at the firm Macmillan LLP.
“Now that we have removed the digital service tax, the dairy and supply management probably the number 1 trade bottleneck that we have with the United States. It is very unresolved.”
When Trump stopped trade talks with Canada on Digital Services Tax on 27 June – Ottawa raised the tax and captured the system of Canada’s supply management shortly before.
In a social media post, Trump called Canada “a very difficult country to trade, including the fact that we have 400% tariffs to our farmers, for years, on dairy products,”.
Canada can charge about 250 percent tariffs on US dairy imports on a set quota set up by Canada-US-Maxico Agreement. The International Dairy Foods Association, which represents the American dairy industry, said that the US has never come close to reaching those quota in March, although the association also said that Canada has been erected due to other obstacles.
When Bill C -202 passed through Parliament last month, Block Quebecois MPS asked it to save the Quebec farmers from American trade demands as a clear victory.
The block bill, which received royal consent on June 26, prevents the Minister of Foreign Affairs from committing to the business talks, either to increase the tariff rate quota or reduce tariffs for imports on a set border.
On its face, this rule prevents Canadian trade negotiaters offer dairy and egg producers from offering import obstacles to canada to give up import obstacles. But when the law ruled using supply management in the form of bargaining chip in business negotiations with the US, it does not completely disrupt the government.
Palerin said that if Prime Minister Mark Carney is asking for a way around the C -202, he can start by conducting a personal business talks instead of leaving Foreign Affairs Minister Anita Anand.
Carney rejected the need for new law during recent election, but vowed to keep supply management from the table in a conversation with America
Palerin said that the government can also address the business hurdle by expanding the number of players that can use dairy quota beyond the “processor”.
“(C-202) does not talk about changing or modifying clearly that will be able to reach the quota,” he said. Expanding access to the quota, he said, “companies such as grocery stores will be able to be able to import American things, and it will probably please the United States to a significant degree.”
Filip Lagase, Associate Professor at Carlton University, an expert from Parliament and Crown, said that the new law does not expand some past called “Royal Professional” – the government’s executive wing’s ability to take some action, for example, the operation of foreign affairs. He said that the government is not forced by law, he said.
He said, “I suspect that the Royal Priorogical has been displaced by the law. There is no specific language bound to the Crown and it takes part in contrast to the widespread intentions (the law that modifies it),”, “he said.
“He said, if the government believes that the law is binding, it is effective. As the defenders of the bill insisted, it gives advantage to the government in the conversation that Parliament has compelled it on the issue.”
He said that a business treaty requires enabling law, so a new bill can remove the obstacles of supply management.
“The bill combines an additional step and certain obstacles, but does not prevent supply management from becoming eventually or weakening,” he said.
MAAW Law Principal Trade Advocate Mark Warner said that the Canada can simply dispute with the law through Parliament if it decides that he needs to give concessions, for example, preserve the auto industry.
“The argument for me that the Canadian government sits with another country, especially the United States, and says that we cannot negotiate this because Parliament has passed a bill – I have to tell you, I have never met an American business officer or lawyer, who will take it seriously,” said Warner.
“My understanding about this is that it will only run through Parliament, until you think other opposition parties will bring the government down on it.”
While the supply management has long been a goal for American business negotiators, the idea of ​​killing it has been a non-starter in Canadian politics for a least longer.
Warner said that any attempt to overcome it would move forward to fill a federal void with rapid litigation, charter challenges and provinces.
“The actual cost of that kind of thing is political, so if you try to take it away, people are shouting and they are blocking the highways and they are telling you the name and blocking anything through the block parliament – you pay a cost in this way,” he said.
But a compromise on supply management may not be a far -fetched penny.
“The system will not be destroyed. I don’t think it is happening anywhere in the coming years and even decades,” Palerin said. “But I think there are changes that can be made, especially through business agreements, including forward quota. Even more decrease in tariffs for outside quota zodiac signs and also who can actually bring into the product.”
The United States trade representative raised specific concerns about supply management in the spring, cited the quota rules established under the Kusma Trade Treaty, which are not being applied as the US’s expected and ongoing disappointment with the pricing of certain types of milk products.
Former Canadian diplomatic Lewis Bliss said that if Canada had to honor Kusma’s “spirit”, as Americans understand it, the problem can actually solve itself.
“We come to the conclusion whether it is disintegration or nothing, but is actually a middle ground,” he said.
This report of Canadian Press was first published on 3 July 2025.
Kyle Duggan, Canadian Press
