Why President Trump Hates Canadian Dairy — And Canada Insists On Protecting It

President Trump has railed against Canada for taking advantage of the U.S. when it comes to trade. Trump may not like it, but those tariffs are part of a politically sensitive, decades-old policy to protect Canada's dairy farmers. The system is called "supply management" and it sets production quotas for the country's dairy, poultry products and eggs.Murray Sherk, the owner of the family-run Pinehill Dairy in Plattsville, Ontario, says supply management helps keep prices stable, gives farmers a steady income and has succeeded in avoiding a milk surplus in Canada. "The stability of our system is of great benefit to not only farmers, but also all kinds of other businesses," he says — like restaurants and trucking. But other countries, including the U.S., see the system as protectionist, in large part because of the high tariffs Canada places on dairy imports. They range from 241 percent for milk (and more for dried milk) to 300 percent for butter, according to the Dairy Farmers of Ontario. Those tariffs kick in after imports have reached a certain quota. In the case of the U.S., once it reaches its annual quota of 3,274 metric tons of butter to Canada, tariffs of 300 percent are applied. President Trump has called the steep tariffs unfair. But Graham Lloyd, the CEO of Dairy Farmers of Ontario, says Canada's supply management system wasn't designed for Canadian dairy farmers to compete with the U.S. It's intended only for domestic use. "We're not challenging them internationally ... we don't increase production with a view to saying, 'let's go and pursue a Mexican market' or 'let's go in pursuit of a European market,'" he says. "It is designed for domestic consumption, so it's a domestic policy."