Canada’s agriculture industry is facing uncertainty as 25 percent tariffs kick in on both sides of the Canada-U.S. border, while some farmers lament that not enough action was taken in the past to put the country in a better position to weather such a development.
On Feb. 1, U.S. President Donald Trump announced a 25 percent tariff on Canadian imports, lowered to 10 percent on energy products, effective Feb. 4. In retaliation, Prime Minister Justin Trudeau announced reciprocal tariffs on $155 billion worth of U.S. imports. Both could have substantial impacts on Canada’s agriculture industry.
Gunter Jochum, a Manitoba farmer and president of the Western Canadian Wheat Growers Association, says producers can expect “a struggle this year for sure” even if the exact implications for their operations are unclear.
“I just can’t see this being good for trade, for industry, for the economy, for anyone really. And whenever government gets involved in trade and trying to control trade, for whatever reasons, it turns into a fiasco. It turns into nothing good and that’s the way I see this unfolding,” Jochum said in an interview.
Jochum says farmers must focus on what remains in their control and not get “sidetracked ... into some dark space where you see nothing but hopelessness.”
However, producers aren’t the only ones affected. Jochum, who farms west of Winnipeg, often sells canola to a canola crusher in Altona, Man. He said it’s one of many companies “getting hit on both sides of the equation” as they buy canola from U.S. farmers but sell meal and oil to American buyers.
“For the time being, I think it will just turn into a lose-lose situation for both sides of the border,” he said, “It basically will just make everything more expensive.”
For their part, the Wheat Growers aren’t looking for federal tax dollars to ease the adjustment.
“A handout is completely counterproductive, because it artificially pushes you momentarily one way, but it doesn’t solve problems that we have within supply chain or the economy overall,” Jochum said.
Jochum says summer’s strikes at ports and railways already undermined foreign buyers’ confidence in receiving the fruits of Canadian agriculture, worsening the impact of the new tariffs. He says Ottawa had been too lax in responding to his association’s calls to promote trade abroad and smooth supply chains at home.
“We’re amazingly adept and amazingly awesome at tying both hands behind our backs and then saying, ‘OK, come, come, let’s do business here in Canada,’” he said.
‘Major Impact’
Jochum finds Canada’s retaliatory tariffs “totally understandable,” but questions whether they will leave a positive impact. But Kyle Larkin, executive director of Grain Growers of Canada, says he “absolutely” supports Ottawa’s response.“The retaliatory tariffs need to be targeted to inflict as much pain as possible on the American economy and American consumers, while also reducing the amount of pain that it inflicts on Canadians and Canadian grain farmers,” Larkin told The Epoch Times.
On the other hand, some Canadian producers buy combines, tractors, or sprayers from the United States, as well as repair parts. They will have little choice but to absorb Ottawa’s counter-tariffs.
“That is going to impact grain farmers who are looking to update their equipment. So, we definitely have two minds to the situation. But we need to take this issue seriously because this is going to have a major impact on the Canadian economy, and we need to get past it as soon as possible,” Larkin says.
Uncertainty
Larkin says the tariffs are already causing prices to fluctuate “across the board” internationally because of the uncertainty. He also knows farmers who have already lost premium contracts due to the tariffs.“It’s a challenging time for farmers whose margins are already so tight because of the increased cost of inputs, such as fertilizer, seed, and pesticides. And you mix into that lowering prices for their crops—that has a significant impact.”
Amidst all this, Larkin says farmers struggle with their succession plans given Ottawa’s stated intention to increase capital gains taxes. The hike has been delayed until January 2026, but it still looms unless a new government, whether another party or another leader, changes course.
Supply Chains
Barry Prentice, a professor at the Supply Chain Management Department of the University of Manitoba, says despite the pain at both sides of the border, it would be years before supply chains between the two countries changed drastically.“In the case of our integrated North American economy, even if people in the U.S. wanted to make these changes, it would take quite a while, I mean I’m talking years, to start replacing things from Canada,” he said in an interview.
“We’re not going to see an immediate disruption of supply chains as if some other competitor is coming along.”
“They don’t have enough little piglets to fill their barns down there [in the U.S.] either, so they’re still going to be needing to buy feeder hogs,” Prentice said.
Trump has said the tariffs placed on Canada, similar to Mexico and China, are due to the countries not taking proper action to disrupt the flow of fentanyl into the United States through their territories. He has also cited the flow of illegal immigrants from Canada and Mexico, and said trade deficits are a source of concern as well.
Trudeau says Canada has taken action to secure the border, launching a $1.3 billion plan to add more equipment and operations, while saying Canada isn’t responsible for a significant inflow of drugs into the United States.
