On June 26, 2025, Bill C-202 was enacted, amending the Department of Foreign Affairs, Trade and Development Act such that the Minister of Foreign Affairs cannot make certain commitments with respect to international trade regarding certain goods. Put more simply, this bill is intended to help protect Canada’s longstanding supply management system – notably, supply managed farming industries – in any future trade negotiations.
Trump talk
On numerous occasions, President Trump has made it abundantly clear he’s not happy with Canada’s deeply entrenched supply management system, particularly when it comes to the dairy industry. This is not surprising, as a large segment of his support comes from U.S. dairy producers. In Trump’s view, supply management is an unfair protection barrier, cutting off the Canadian dairy, egg and poultry market to U.S. producers. It was such a sticking point for Trump that under the 2018 Canada-United States-Mexico Agreement (CUSMA), Canada actually conceded to some Trump demands and agreed to allow U.S. dairy and poultry producers more market access north of the border.
Challenging supply management
Supply management is still very much part of Canada’s agricultural landscape, clearly limiting how much the U.S. can export to us. Given Trump’s increasingly combative stance on trade and tariffs, however, previous concessions made by Canada may not be enough. For the Trump administration, the goal is full and unfettered access to the Canadian market with no tariffs whatsoever, which is completely at odds with the supply management approach. If the Canadian government were to make further concessions to Trump by weakening the supply management system, it would have a massive negative financial impact on Canadian producers. Without the market protection offered by supply management – namely, a guaranteed level of profitability – many Canadian farm businesses would become financially unviable. This is precisely what Bill C-202 is aimed at preventing.
Ongoing negotiations
With negotiations continually evolving, there could be a situation where difficult choices and sacrifices might have to be made to avoid more wide-reaching and damaging trade consequences for Canada. While Bill C-202 is now law, legislation can always be modified or even repealed in the future. Should the Trump administration be absolutely intent on getting exactly what it wants – i.e., complete access to the Canadian market – it is possible supply management could take a hit, with severely negative consequences for Canadian producers.
The new reality
Prime Minister Carney has said it is highly unlikely any new trade deal with the U.S. would exclude tariffs. For Canadian producers within the supply management system, this is worrisome because the market protections and guarantees they expect – and based their investments on – could be eroded as part of a larger trade deal with the U.S. This creates great uncertainty for Canadian producers, decreasing the incentive to invest more in their operations. Looking back to CUSMA, the government did provide some relief to Canadian producers. Dairy farmers received subsidies to help compensate them for the financial losses they experienced when the U.S. was granted more access to the Canadian market. If Canada makes more supply management concessions to the U.S. in any new trade deal, it is likely the government will once again step in to help offset the financial impact for Canadian producers.
Broader implications
Given the size and scope of the farming industry in Canada, it is highly unlikely supply management will be drastically reduced. There is too much at stake financially for the greater economy. For example, banks and lenders would be directly impacted as farm businesses carry considerable loans and use their quota investments as debt collateral. Farming equipment manufacturers and sellers would also be greatly affected by any downturn in the industry. Perhaps most importantly, supply management enables the Canadian farming industry to be more diverse with producers of various sizes able to generate a reasonable profit and maintain sustainable businesses. If supply management were to be dismantled or markedly decreased, many of these smaller producers would not be able to continue operations and the industry would become dominated by a few large producers.
Reason for optimism
In spite of the challenges with the current U.S. administration on trade, Canadian farm businesses are generally optimistic about the country’s agriculture industry and the future of supply management. This sentiment is supported by facts – supply management quota prices are rising, the value of farm land is rising and everything is on an upward trajectory. This indicates a very positive outlook among those in the Canadian agricultural industry. It might be a bit of a bumpy ride – marked by periodic chest thumping from the Trump administration – but if the members of any industry can weather these turbulent times, it’s farmers, as they have a proud history of resilience and perseverance.
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