In addition to the Trump administration, Canada boasts its own share of destructive protectionism.
President Trump’s trade war with Canada is, as the Wall Street Journal editorial board put it, “the dumbest trade war in history.” Yet even while waging the dumbest trade war in history, Trump has hit upon one truth. After talks between Canada and the United States broke down, Trump decried Canada’s “ridiculously high tariffs” on American farmers and farm products. Ridiculously high is right: Under Canada’s “supply management” system (to use the government’s preferred euphemism), Canadian imports of American dairy, poultry, and egg products are subject to tariffs that can reach 300 percent or higher after a certain tariff-free quota.
Supply management, which involves quotas, tariffs, and bureaucratic measures to limit the supply of farm products, is truly damaging: A recent study by the Montreal Economic Institute estimated that it costs the average Canadian C$224 per year because of artificially inflated food prices. Using Statistics Canada income data and low-income cutoffs (a measure of relative poverty), it calculated that this excess cost effectively pushed about 120,000 Canadians below the poverty line. Other studies have found similarly negative effects. Back in 2015, an article in Canadian Public Policy estimated that supply management cost the poorest households in Canada approximately 2.3 percent of their income, with a greater burden for those with children.
While forcing Canadian families to pay inflated food costs, supply management also forces farms to destroy products to preserve the inflated prices. In 2023, a dairy farmer in Ontario made headlines after being forced to destroy 30,000 liters of milk for exceeding his quota. Low-income Canadians had trouble affording groceries, food bank use was escalating, families had their wallets squeezed — and the federal government was forcing farms to destroy billions of dollars’ worth of food. One study estimated that from 2012 to 2021, at least 6.8 billion liters of milk (with a retail value of $6.7 billion) were destroyed.
All told, the value of quota on farms’ balance sheets in Canada — that is, farm owners’ artificial monopoly rights to sell agricultural products at inflated prices because of tariffs and other protections — is $49.2 billion. Note that this figure understates the true cost of supply management to Canadian consumers because it represents only the present value of the excess costs they pay for food. The $49.2 billion does not include the losses from government-enforced milk dumping, the value of food that is never produced and consumed because grocery store prices were far higher than they should have been, or the costs of incessant lobbying by farmers to preserve their monopoly rights.
Astonishingly, all political parties in the Canadian Parliament steadfastly insist on preserving supply management. This speaks to the extraordinary political power wielded by fewer than 10,000 farms that produce supply-managed goods in Canada. To benefit these few farmers, over 40 million Canadians pay higher grocery prices, many are effectively pushed into poverty, and the Canadian government hands Trump — who has continually railed against supply management — a legitimate talking point. The continuation of supply management hurts Canadians in more than one way.
Of course, the corollary of supply management being highly punitive to Canadians is that Trump’s tariffs on imports from Canada and elsewhere are highly punitive to Americans. According to a study published this past summer in the Journal of Economic Perspectives, “In 2025, statutory tariff rates on US imports rose to levels not seen in over one hundred years. What were the implications for prices? . . . Tariff pass-through to US import prices reached 92 percent, so the United States bore a large share of the costs.”
Other studies have similarly concluded that Americans bore approximately 90 percent of the cost of Trump’s 2025 tariffs. But the high cost of tariffs themselves to American consumers and businesses is not the only reason Trump’s tariff war on Canada is, to use that adjective again, dumb. Tariffs and other forms of protectionism open the door to all sorts of opportunities for cronyism and rent-seeking. Launching economic attacks on friendly countries weakens America by alienating allies. And the policy chaos discourages business investment and hiring.
Long-term business investment relies on low, stable regulation and taxation; high, constantly changing trade policy is anything but. Based on a study done on the economic effects of Trump’s first-term tariffs, Cato Institute economic scholar Scott Lincicome cited estimates that “heightened trade uncertainty cost almost $100 billion in foregone US investment since January of last year.”
It’s time to bring the dumbest trade war to an end — on both sides of the border. Donald Trump’s auto tariffs, Canada’s agricultural tariffs, and every other nonsensical protectionist policy ought to be scrapped for the good of all.