Here’s why Donald Trump is taking aim at Canada’s dairy industry

Click to play video: 'Justin and Sophie Trudeau greet Donald Trump at G7 summit'
Justin and Sophie Trudeau greet Donald Trump at G7 summit
WATCH ABOVE: Prime Minister Justin Trudeau and his wife Sophie Gregoire Trudeau greeted U.S. President Donald Trump on the front lawn of the Le Manoir Richelieu in Charlevoix, QC Friday morning – Jun 8, 2018

President Donald Trump arrived in Quebec for the G7 Summit on Friday morning, and before departing from Washington, D.C., took the time to fire fresh volleys at the Canadian system of supply management.

The system manages the supply of dairy, egg and poultry products by imposing steep tariffs on imports of those goods in order to prop up domestic industries that could face foreign competition if the protections on them were to be dropped.

READ MORE: U.S. asks Canada to end dairy, poultry trade barriers, even as it puts up its own

It is not the first time Trump has attacked the system, which has been criticized even by some in Canada as protectionist and a source of high prices for consumers on things like dairy, relative to what consumers in other countries pay for their domestic dairy products.

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But his tweets on Thursday and Friday included a threat of further tariffs that could be imposed on Canadian goods imported by the United States.

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Supply management has been a target on Trump’s official radar since early 2017, when he railed against the “unfair” system and its impact on Wisconsin dairy farmers who cannot export their products to the Canadian market without facing steep tariffs of up to 300 per cent.

READ MORE: Trudeau, Macron to push Donald Trump on tariffs at G7 summit

Those translate into a higher cost for consumers to buy those products in the Canadian market, and also limit how much can actually be brought into the country within a particular time frame.

The challenges essentially mean that there are more costs and barriers than benefits for non-Canadian producers.

WATCH BELOW: Canada is ‘not a good neighbour’ when it comes to lumber, dairy; Trump administration

Click to play video: 'Canada is ‘not a good neighbour’ when it comes to lumber, dairy; Trump administration'
Canada is ‘not a good neighbour’ when it comes to lumber, dairy; Trump administration

In October 2017, Trump demanded during NAFTA talks that supply management on dairy, eggs and poultry be ended within the next 10 years.

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Trudeau refused, and has continued to do so.

READ MORE: Dairy 101: The Canada-U.S. milk spat explained

That, he is now arguing, is why Trump is attacking the practice publicly ahead of a major international summit.

“There’s a reason why Donald Trump continues to write tweets on dairy products and Canada — it’s because I’ve told him many times: ‘No, he won’t touch, we won’t touch our supply management system,'” Trudeau said during a press conference on Thursday.

Months of negotiations on NAFTA appear to have stalled in recent weeks.

WATCH BELOW: Trudeau and tariffs: What will he say to President Trump?

Click to play video: 'Trudeau and tariffs: What will he say to President Trump?'
Trudeau and tariffs: What will he say to President Trump?

Earlier this year, Mexico and the United States were both facing timeline pressures to get a deal done and handed off to their respective legislatures ahead of the Mexican general election on July 1 and the American mid-term elections this fall.

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However, Mexico’s leading presidential candidate said at the end of April that he would respect any agreements reached on the deal if elected.

The threat that a new government might reopen chapters of the deal, which had already been agreed upon, was one of the pressures adding to the race to get a deal done quickly.

READ MORE: Leading Mexican Presidential Candidate Would Respect Nafta Deal

But in May, Mexico’s economic minister said there was only a 40 per cent chance of reaching a deal before July 1.

That means the majority of the timeline pressure is now on the Americans, and it may explain at least part of the reason for Trump’s recently erratic behaviour on the file.

READ MORE: Canada set to resist U.S. dairy pricing proposal in NAFTA: reports

On May 31, he imposed harsh new tariffs of 25 per cent and 10 per cent on Canadian steel and aluminum, respectively, as well as imports from Mexico and the European Union.

That came after he had twice extended temporary exemptions from the tariffs to the countries.

WATCH BELOW: Quebec City prepares for G7 protests as Trudeau readies for trade tariff clash with Trump

Click to play video: 'Quebec City prepares for G7 protests as Trudeau readies for trade tariff clash with Trump'
Quebec City prepares for G7 protests as Trudeau readies for trade tariff clash with Trump

The tariffs had originally been announced in March and Trump quickly moved to link them with NAFTA talks, suggesting Canada and Mexico could secure permanent exemptions by capitulating to his demands.

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Negotiations, however, have remained prickly with outstanding disagreements on a number of key files, including agricultural barriers, auto imports and the issue of whether to include a five-year sunset clause in the deal.

There were reports that Trump had nixed a deal reached by his team earlier in the month and abruptly shifted his priorities on what to secure from the deal.

WATCH BELOW: Trudeau calls Trump tariffs ‘insulting and unacceptable’

Click to play video: 'Trudeau calls Trump tariffs ‘insulting and unacceptable’'
Trudeau calls Trump tariffs ‘insulting and unacceptable’

On May 31, he announced the threatened steel tariffs would go into effect and mused about whether to impose tariffs on auto imports as well.

Trudeau, who has been both praised and criticized for his lack of criticism of Trump since the latter took office, blasted the measures as “absurd” and “unacceptable,” casting them as a blow to Canada-U.S. relations.

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READ MORE: Here are 4 potential areas for conflict (other than steel tariffs) at the G7 Summit

The Canadian government announced it will impose retaliatory tariffs worth $16.6 billion on roughly 134 American products, designed to hurt manufacturers in areas where Trump received strong support in the last election.

Trudeau also told reporters he had offered to personally go down to Washington in May to hammer out the final details of a NAFTA deal virtually completed.

READ MORE: Tariffs on steel and aluminum might cost the U.S. 400,000 jobs — and Canada could get hit too

Trump, he said, handed him off to U.S. vice-president Mike Pence, who said any meeting would include a precondition: a sunset clause.

That is one of the major no-go issues for Canada in NAFTA talks, and Trudeau refused.

Trump is expected to face a barrage of criticism at the G7 on his recent decision to launch a trade war and impose tariffs on both Canada and the European Union, both historical allies with the U.S.

It is not clear how the notoriously criticism-averse president will respond.

But if the disagreements over tariffs and supply management so far are any indication, there could be more Twitter attacks yet to come.


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