Canadian farmers are vulnerable to United States President Donald Trumps tariffs.
Ted Bilyea of Canadian Agriculture Policy Institute said “the United States agri-food trade balance with Canada has changed to a significant and growing deficit; Canada exports more in agri-food to the U.S. than it imports, across a broad category of products.
“Under a sharply protectionist U.S. administration, this could turn out to be a liability for Canada. But the U.S. is also trade deficit in agri-food with Mexico, and with the rest of the world as a whole- even as global supplies of many staple food are short- so tariffs could result in self-injury to the U.S.,” he wrote in a policy note.
“The U.S. tariffs must be understood in the context of deportations that shrink the workforce and a reduced tax base”, said Douglas Hedley, a research associate and co-author of the paper.
The tariffs appear to aim to increase tax revenues and to bring foreign industries back to the U.S., but farmland can’t be moved, he noted.
The deportations will tighten an already-stretched agri-food workforce, highly dependent on foreign workers. Tariffs also threaten to make food prices higher “and are entirely inconsistent with U.S. trade obligations to Canada and Mexico,” he said.
When China cut imports of canola, the U.S. became a good alternative, but the 25 per cent tariff will bite hard.
“The free trade deal among Canada, Mexico and the U.S. is still in force today and could be leveraged to provide some relief, or slow down the threat of 25 percent tariffs”, said Al Mussell, the lead researcher and co-author of the paper.
“But Canada needs all of the tools of diplomacy available, including retaliation - particularly on products that we both import from and export to the U.S. for substitution, and being careful to exempt critical imports from the U.S.
“Industry leadership will be more important than ever, as we engage this situation in a period of flux in political leadership,” Mussel said.
They say Trump’s 2019 tariffs reduced U.S. gross domestic product, so may impact foreign exchange rates and prompt the U.S. to impose currency controls.
Canola, canola oil for ethanol and canola meal are high on the list of products the researchers mention.
They also note that exports of bakery goods, fresh fruits and vegetables and beef have increased since 2020, but so too have Canadian imports of U,S. beef.
They made hardly any mention of Canadian exports of hogs and pork, both of them significant. The tariffs could bankrupt some, and perhaps many, Canadian hog producers.
One Ontario region that will be hard hit is the Leamington-area greenhouse business growing tomatoes and cucumbers, but they might benefit from Canadian tariffs on U.S. fruits and vegetables.
