This article originally appeared in the Globe and Mail.
By Ed fast, July 9, 2025
As Canada’s trade talks with the United States intensify, two points have become clear: the case for supply management has become difficult to sustain, and yet its worth as a bargaining chip should not be ignored.
Supply management continues to face concerted attacks from those who challenge its value as a guarantor of food security. In a timely article published in Reason last month, Macdonald-Laurier Institute contributor Stuart J. Smyth argues that Canada’s supply management system – which regulates production and pricing for dairy, poultry, and eggs – has outlived its usefulness and should be dismantled.
Mr. Smyth, a University of Saskatchewan agriculture professor, traces supply management’s origins back to the 1960s and ’70s, when arbitrary tariffs and the absence of enforceable international trade rules left Canadian agriculture vulnerable. In today’s world of modernized trade agreements and resilient supply chains, Mr. Smyth says it’s time to restore free-market forces to these sectors.
His argument has merit. In theory, freer markets do improve efficiencies, drive innovation, and deliver lower prices to consumers. Over time, most developed countries have moved away from rigid protectionist regimes. Canada’s abolition of the Canadian Wheat Board comes to mind. As one of only 51 MPs in the last Parliament to vote against further entrenching supply management in future trade negotiations, I share a desire not to allow one industry to sabotage the trade interests of the rest of our economy.
However, Mr. Smyth’s case could have added one very important additional twist: the re-emergence of Donald Trump and the increasingly erratic, combative, and transactional approach the United States has taken toward its trading partners, especially Canada.
Dismantling supply management in this moment of geopolitical uncertainty and rising economic nationalism would miss a unique opportunity: the chance to leverage a persistent bilateral irritant to Canada’s advantage. We are operating in a world where trade rules appear to no longer matter, and in which even our closest ally treats trade not as a mutual benefit but a zero-sum blood sport.
In that context, we cannot unilaterally surrender one of Canada’s few remaining economic bargaining chips, squandering the ability to secure reciprocal concessions and assurances in return. Already, we have acquiesced to Mr. Trump’s request to rescind the Digital Services Tax in a fashion that has been perceived as handing the President a victory with no apparent reciprocal gains for Canada.
The Americans, once the leading champions of multilateralism and postwar economic co-operation, have retreated into a new isolationist mercantilism. Mr. Trump’s return to the world stage has been accompanied by threats of punitive tariffs, national security justifications for trade barriers, and contempt for international rules-based institutions. Canada – with a smaller market and deeply integrated relationship with the U.S. – is especially vulnerable to this new doctrine of “America First, everyone else last.”
That leads to important questions. What would a post-supply management Canada look like in the face of a massively subsidized U.S. agricultural sector and a White House unconcerned with playing by the rules? Without the U.S. implementing agriculture support reforms on its side, would our farmers – especially in dairy, poultry, and eggs – survive the onslaught of cheap imports and capricious U.S. tariffs? I think not. And Mr. Trump, who views every bilateral relationship through the lens of dominance and concession, would have no hesitation sacrificing Canadian farms to achieve imagined economic gains at home.
In that context, Canada’s recent passage of Bill C-202 takes on greater significance. The bill explicitly removes dairy, poultry, and eggs from future trade negotiations. It is a provocative – and controversial – reaffirmation of Canada’s selective commitment to market intervention in agriculture and food security.
This protective stance comes at a price – but, managed strategically, could also present an opportunity. Adding agricultural market protection to the pile of bilateral grievances increases the likelihood that Canada will be targeted with extremely difficult concession demands in the looming renegotiation of the Canada-U.S.-Mexico Agreement (CUSMA). Yet it could be one of Canada’s few remaining bargaining chips to counter another fierce U.S. attack on our economy.
That is why we must reframe the debate. The question isn’t simply whether supply management is efficient. It’s whether it should be treated as a standalone issue or addressed as part of a broader rebalancing of Canada’s asymmetrical relationship with the United States. Treating it as part of the latter is to the advantage of our overall negotiating position.
What Canada needs is a “grander bargain” – a comprehensive renegotiation that encompasses the full spectrum of our bilateral interests. Trade in dairy, poultry, and eggs should be placed within a much larger conversation that includes critical minerals, energy co-operation, continental defence, softwood lumber, water and food security, cross-border infrastructure, and regulatory harmonization. Such an approach would provide the leverage Canada currently lacks to promote our interests in sensitive sectors – like agriculture, culture, and telecoms – while advancing new national priorities.
This broader negotiation must also include stronger enforcement mechanisms and legislative lock-ins to prevent another Trump-style unraveling of bilateral deals. CUSMA’s fragility has already manifested under pressure. If Canada is to maintain meaningful long-term access to U.S. markets, and protect its own from unfair manipulation, it must insist on durable, binding dispute settlement provisions and a clear process for future reviews of our free trade agreement.
Supply management has long been a lightning rod in Canada’s trade negotiations – a stubborn, often misunderstood “Gordian Knot.” But the solution is not to recklessly cut the knot. It is to understand its symbolic and strategic significance in an increasingly hostile global trade environment.
Free markets, yes. But free and fair markets. And until Canada can be assured of the latter, we would be wise to keep our shield intact.
Ed Fast is a distinguished fellow at the Macdonald-Laurier Institute. He served nearly two decades as an MP, and from 2011 to 2015 was Canada’s international trade minister.
