The Canadian decision to eliminate their digital services tax created better conditions for trade negotiations with the U.S. but agricultural disputes between the two nations present a more significant trade barrier. The supply management system of Canada operates as the main point of contention because it controls production through strict rules and maintains high tariffs on dairy products and poultry and eggs.
The economic discussions between Prime Minister Mark Carney and President Donald Trump started again in mid-June with a goal to reach a new agreement by July 21. Trump rekindled trade tensions through his Truth Social post which criticized Canada’s dairy tariffs while warning about new duties if no progress occurs.
The main obstacle in trade negotiations stems from dairy products according to Sylvain Charlebois who serves as a food policy expert at Dalhousie University. The talks risk collapse through one additional social media post from Trump.
The supply management system of Canada maintained its position during previous trade renegotiation periods including the 2020 USMCA deal. The USMCA agreement granted restricted access to Canadian dairy markets but maintained tariffs exceeding 200% for all shipments that exceed quota restrictions. The Washington government maintains its opposition to how Ottawa distributes its quota allocations.
The Trump administration maintains strong pressure on Carney to make agricultural concessions while facing domestic political opposition to further trade concessions. The future of North American talks remains doubtful because Trump set July 9 as his deadline to finalize an EU trade agreement.
