We have recently learned that the Malignant Narcissist currently occupying the White House is upset because our Prime Minister didn’t flinch. PM Carney, when Howard Lutnick showed up at the last minute and, in a move right out of the “Art of the Deal” playbook, added a few “little” items to the agreement, walked away from the table instead of acquiescing like he was supposed to do. Since such a move is impossible in Donny’s world-view, it took him a moment to respond, but when he did it was totally in character – he threw a hissy-fit.
In addition to all the name-calling, he used the only economic tool he knows other than bankruptcy; he threw another range of tariffs at us set to take effect on New Year’s Day, 2027. Prominent on that list is, surprise, surprise – dairy. However, this could (maybe, kinda, possibly) be a plus in what is otherwise another frontal attack in the trade war. I’m no economist but stay with me.
Currently, the amount of dairy that the US can dump (that word ‘dump’ is important) onto the Canadian market is restricted. Under CUSMA Canada has agreed to let the USA supply 18% of our total dairy. Any amount higher than that will be levied at a very stiff 250%. I know, sounds ridiculous, right? Sounds like the orange and blue autocrat may have a point. But that figure is, as I understand it, meant to signal a hard ‘NO’ on stretching that limit. Proof of its effectiveness is the fact that the tariff has never been levied – ever.

The biggest dairy producing state in the US, Wisconsin, has more cows than all of Canada; and that little detail is why Canada uses “Supply Management” to oversee the production of dairy products. Each farmer is only allowed to produce a certain amount of milk for sale in Canada. In exchange, farmers are guaranteed they will be able to sell a given amount of milk, at a given price. This means small farmers get to make a decent living instead of looking for government bailouts or hoping a country singer starts a benefit concert when times get tough. Milk and butter wind up a little pricey but, generally speaking, it sets a level playing field.
America however, has a different definition of ‘level’. In the US farmers compete to produce as much milk as they can as cheaply as possible. Family farms end up competing head-to-head with corporate mega-farms, frequently losing, and as a result wind up selling their farms to Big Dairy. In a bid to stave off assimilation as long as possible they pump their cows with large amounts of hormones and antibiotics to try to maximize yield.
This means American dairy operations make far more milk than Americans can drink. (This is where that word “dump” comes in.) They need to do something with all that ‘moo-juice’, and coveting our higher more consistent prices, look to sell (dump) their overflow on to us. Without that ridiculously high tariff, that 18% would quickly climb to near 100%, putting our farmers out of business and flooding the Canadian market with hormone and antibiotic-laden milk from all those, mostly unvaccinated, cows.
So it seems to me these “New Year’s” tariffs might conceivably backfire and benefit Canadian dairy. The new tariffs from both sides (Carney has said he’ll go toe-to-toe, dollar-for-dollar in retaliation) could price the Canadian market out of reach of even the big dairy mega-corps. If that happens then the American quota will effectively fall to zero. Canadian farmers would be allowed to produce 18% more product. It’s not likely to result in lower prices, but with full access to the market then at least things like Gay Lea butter and Chapman’s ice cream aren’t likely to cost more.
Now, are things going to play out this way? I don’t know, maybe? Like I said I’m not an economist (I know a couple, one of them even teaches at a university) but I think they could. And if they do, then the only ones to suffer under that scenario will be the same American dairy farmers who voted that “stable” genius into office in the first place.


