As 2025 draws to a close, a critical issue from earlier in the year continues to simmer, threatening Canada's broader economic ambitions. The nation's protected dairy market, governed by a strict supply management system, remains a persistent thorn in the side of international trade relations.
The Sticking Point in Trade Talks
This past summer, U.S. officials once again highlighted Canada's restricted dairy market as a major obstacle. They argue it prevents the resolution of long-standing disputes and the settlement of new, comprehensive trade agreements. The issue, which flared up in July 2025, underscores a recurring tension between protecting a domestic industry and pursuing a more open trading future.
In a revealing episode of the Full Comment podcast, host Brian Mulroney spoke with policy expert Martha Hall Findlay about the profound consequences of Ottawa's stance. Recorded on July 4, 2025, the discussion centered on the federal government's continued refusal to put the supply management system on the table during trade negotiations.
A System Under Fire
Hall Findlay explained how this protectionist framework, which controls the production, pricing, and import of dairy, is viewed with frustration by major trading partners. She argues that the system is maintained primarily for the benefit of a select few. A few thousand dairy farmers, many of whom are millionaires, reap the rewards of this closed market, according to the analysis.
This small but powerful cartel, as described in the podcast, maintains its influence through concentrated lobbying efforts. The result is a policy that prioritizes the interests of this group over the wider economic good of the country.
Broader Consequences for Canada
The fallout extends far beyond diplomatic spats. Hall Findlay detailed the multi-layered impact of maintaining supply management:
- Consumers Pay More: Canadians face significantly higher prices for dairy products like milk, cheese, and butter compared to consumers in countries without such systems.
- Trade-Exposed Businesses Suffer: Every other Canadian sector that relies on exports faces collateral damage. Stubbornness on dairy can stall or derail entire trade deals, limiting market access for agriculture, manufacturing, and technology firms.
- Economic Potential is Capped: The inability to settle modern trade agreements hinders growth, innovation, and competitiveness on the global stage.
The podcast episode, featured as one of the "best of 2025" during the holiday season, serves as a stark reminder of an unresolved policy dilemma. It presents a clear conflict: the preservation of a managed market for a small segment of agriculture against the pursuit of a more ambitious and prosperous trading future for all of Canada. As the new year approaches, the question remains whether political will can be found to address this entrenched issue.
