Canada–U.S. Trade Talks Strained by Dispute Over Supply Management

Ongoing tensions between Canada and the United States are being intensified by Canada's firm stance on its supply management system—an issue that could become a major stumbling block in future trade discussions.

Florian Possberg, a partner at Polar Pork, has voiced concern over the potential fallout, particularly following U.S. President Donald Trump’s recent announcement of a proposed 35% tariff on Canadian imports, set to begin August 1st. The move has revived fears of a broader trade conflict between the two countries.

According to Possberg, Canadian Prime Minister Carney had publicly stated on June 16th that he expected a resolution with the U.S. within 30 days. However, that deadline has come and gone without a deal in place. "If the U.S. insists on dismantling Canada’s supply management system, we could see a serious escalation in trade hostilities," he warned.

The issue centers around longstanding U.S. frustrations with Canada's regulated dairy and poultry markets. American negotiators view these as entrenched barriers to trade, while Canada sees them as vital to protecting domestic producers and rural communities.

“What’s becoming increasingly clear is that the U.S. may be using this moment to press for the removal of barriers that have irritated them for years,” said Possberg.

Yet, the Canadian Parliament recently made its position unequivocally clear—unanimously reaffirming that supply management is off the table in trade negotiations. This defiant stance sets the stage for a potential showdown.

“The Americans are demanding the system be dismantled, no matter what. But Canada is standing firm. That kind of deadlock could very well lead to a sharp escalation in tariffs and trade retaliation. And honestly, there’s no telling where this might go next,” Possberg added.

Although supply-managed sectors represent only a small slice of Canada’s economy, they enjoy strong political backing, making compromise difficult—if not impossible.