A dairy scandal in Canada—dubbed Buttergate—holds crucial economic lessons for the U.S. as well as for our northern neighbor. It highlights the idiocy of both tariffs and highly intrusive government regulations. 

Demand for butter soared during the pandemic lockdowns, as Canadians had more time for baking. In a normal market dairy farmers would have beefed up their herds to produce more milk.

But Canada rigidly regulates the production and pricing of milk, eggs and poultry. The upshot: Dairy farmers were not allowed to expand their herds. Moreover, because of tariffs and other trade barriers, Canada couldn’t import more dairy products from the U.S.

So Canadian farmers resorted to getting more milk from their cows by feeding them more palm oil product. Milk production went up—but the texture of the butter went down.

Lumber is another example of government brainlessness. At a time when U.S. prices of wood and wood products have risen meteorically, the Biden Administration wants to double tariffs on Canadian imports.