Justin Trudeau Is Running a Milk Racket
Trump is right: Canada's protectionist food policies rip the world off.
Before we pick apart the recent calumnies heaped upon Canada by the president of the United States and his lieutenants, it is useful to meet a woman who may fairly be described as the perfect anti-Trump: a thoughtful, impeccably rational, fluently bilingual Canadian policy wonk named Martha Hall Findlay.
At the federal Liberal Party’s epic 2006 convention, Hall Findlay was the only woman among the eight leadership candidates and came in dead last. In 2013, she tried again, campaigning on important but hopelessly technocratic issues such as building a national energy infrastructure. This time, she ranked a respectable third. But since now-Prime Minister Justin Trudeau won that contest on the first ballot with 79 percent of votes cast, silver and bronze ranked as mere footnotes.
Populists such as U.S. President Donald Trump get elected by telling attractive lies. Wonks such as Hall Findlay become noble failures by repeating inconvenient truths. Imagine a U.S. politician beginning her presidential campaign by telling Iowa voters that the federal ethanol mandate makes no sense, that the Second Amendment wasn’t drafted to protect individual gun owners, and that building a border wall is a big waste of money. In Canadian terms, that’s basically what Hall Findlay — who now serves as the CEO of a respected think tank — did during her last Liberal leadership bid.
You may be tempted to raise an eyebrow when I tell you that the protectionist racket in milk, cheese, eggs, and poultry has become the third rail of Canadian politics. But it should be noted that many otherwise free-trading nations go weird when it comes to food. Japanese rice tariffs have been as high as 1,000 percent. To protect its meat industry, France has passed a law banning the use of labels such as “soy sausage” or “mushroom burger” on vegetarian products. And in the United States, Big Sugar cynically props up a nakedly protectionist law that guarantees a minimum price that’s a quantum leap beyond the amount customers would pay on the global market.
Canada’s supply-management system — often known as the dairy cartel — is a combination of three market-rigging mechanisms: centralized price-setting, allocated production quotas, and exorbitant tariffs. It’s a complete racket that drives massive profits to a relatively small group of largely corporate farm operations. But the dairy industry operates a slick, well-funded lobby and propaganda operation, as the sugar industry does in the United States, that portrays dairy producers as fresh-scrubbed mom-and-pop proles waking up early to ensure Canadians have food on their table. One also hears ridiculous scaremongering to the effect that any relaxation of the supply management system would compromise food safety — as if Wisconsin and New Zealand were selling Canadians dairy moonshine from radioactive cows.
Hall Findlay is one of the few prominent figures in Canadian public life who has drawn attention to this government-mandated scam. In 2012, she came out with a detailed report cataloguing all the harms that supply management does to the Canadian economy. “There is an entire country full of consumers — taxpayers and voters — who are paying one and a half to three times more for their milk, other dairy products, chicken and eggs than they should be — amounting to more than $200 more a year per average family,” she wrote. And as for that Norman Rockwell family farm idyll we see in cartel ads: Between 1971 and 2012, “the number of Canadian dairy farms has dropped by a staggering 91 percent.” Op-ed writers swooned over the report, praising Hall Findlay’s intellectual honesty. But career politicians stared at their feet — including the country’s nominal Conservatives.
All of which brings us, finally, to Trump. For it is sometimes the case in politics that even the most cynical and ignorant politician may, by sheer happenstance, stumble accidentally into wisdom. And though Canadians don’t like to admit it — especially in light of Trump’s appallingly juvenile attacks on Trudeau following the U.S. president’s bizarre performance at the G-7 meetings in Quebec — this is the case with Trump’s attacks on Canada’s dairy racket. It isn’t the usual fake news from Trump when he tweets that “Canada charges the U.S. a 270% tariff on Dairy Products!” He’s being only slightly imprecise here: The actual breakdown is 270 percent on milk, 245 percent on cheese, and 298 percent on butter. And, as Hall Findlay has argued, the losers aren’t just foreign exporters but also Canadian consumers.
While it’s sometimes difficult to know precisely what Trump is thinking or talking about when he rails generally about the United States being “the piggy bank that everybody is robbing,” the dairy file is one that he’s gone after specifically in the past — including a 2017 attack that included his tweet that “Canada has made business for our dairy farmers in Wisconsin and other border states very difficult. We will not stand for this. Watch!” And there have been reports that some relaxation of Canada’s supply-management regime would be included in any revision of NAFTA negotiated by the signatories. Many Canadian small-c conservatives have been urging Canada to swallow its pride, admit that Trump has a point, and perhaps leverage this concession to avoid tariffs on steel, aluminum, and auto parts, where Trump is on much shakier ground.
Unfortunately, with his weekend meltdown, Trump now has made this more or less impossible — because giving in to him in the current climate would grate hard against Canada’s wounded pride.
Until now, Trudeau has been dealing with Trump in an admirably cool and detached manner. But the G-7 changed everything — at least, until Trump’s next change of mood. As Nathaniel Taplin wrote this week in the Wall Street Journal: “It finally happened: U.S. President Donald Trump picked a fight with the nicest people on earth.” And with everyone from French President Emmanuel Macron to Ontario’s incoming populist premier Doug Ford (a supposed Trump clone) explicitly backing Trudeau, Canada’s prime minister has no reason to back away from his popular (but economically perverse and self-defeating) claim that “we will always defend our supply management system.”
History shows that all politicians have a mixture of good and bad ideas. But rare is the public figure whose approach is to toxic, so off-putting, that he manages to poison even the most impeccable public-policy positions merely by dint of advocating them. And while American dairy producers have trouble getting their product into Canada, Trump’s poisonous influence wafts freely across borders.