Donald Trump has put Canada on notice that he is taking aim at its much-coveted supply management system that protects the dairy industry.
Trump levelled the threat during an event at a Wisconsin factory where he unveiled his “Buy American-Hire American” executive order.
He says he will seek “fair trade” with all of America’s trading partners “and that includes Canada.”
Trump says “unfair things” have happened in Canada to U.S. dairy farmers.
Last month, a free-market think tank suggested using more open trade in the dairy sector as a bargaining chip in upcoming trade negotiations with the U.S. in exchange for more stable trade in softwood lumber.
The Montreal Economic Institute recommends limiting protectionism in both industries to help consumers, spur economic productivity, and ultimately create more successful businesses in both countries.
Both are shielded from open trade in the existing North American Free Trade Agreement, employ more than 200,000 people in Canada, and claim a similar economic value of $14-15 billion to Canada’s GDP.
The current system limits the amount of dairy and poultry Canada can import before a tariff kicks in. Dismantling it would mean lower prices at the supermarket, and a more internationally competitive industry, says the paper.
For his part, Finance Minister Bill Morneau will tell this week’s meeting of G20 finance ministers in Washington that Trump’s executive order runs contrary to Canada’s trading interests.
Senior finance officials who briefed reporters on the meetings suggest the order would run counter to protections Canada has secured through NAFTA.
Morneau and U.S. counterpart Treasury Secretary Steven Mnuchin will be in Washington on Thursday for meetings that will include central bank governors and officials from the International Monetary Fund and World Bank.
White House officials say Trump’s order looks at lifting exemptions that allow foreign companies to bid on projects in the U.S., something Canada currently enjoys under NAFTA.
They say the Trump administration plans to take steps to protect the integrity of the U.S. steel industry.
Steel is expected to play a key role in any joint infrastructure projects between Canada and the U.S., something Trump and Prime Minister Justin Trudeau pledged to co-operate on during their White House meeting in February.