Canadian ag sector braces for 4 years of chaos

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This article was published 30/11/2024 (649 days ago), so information in it may no longer be current.

Folks on the northern side of the U.S. border are still hyperventilating over president-elect Donald Trump’s surprise threat to impose 25 per cent tariffs on imports from Canada and Mexico.

But maybe he did us a favour. His now-infamous tweet has spawned a new awareness that it’s time to quash any illusion Canada held a favoured relationship with the United States.

Its proximity, the integrated supply chains that have evolved over the past several decades in sectors such as automaking and food production and its endowment of desirable natural resources do not give Canada elite privileges with its largest trading partner. On the contrary, these only amplify Canadian dependence on that market and makes us more vulnerable.

There is nothing warm and fuzzy about Trump’s tightening squeeze on the Canadian economy or his willingness to weaponize tariffs, normally seen as a protectionist measure, as an offensive tactic to extract random concessions.

The rules in a dispute only matter if both parties are willing to play by them — which isn’t the case here. Trump neutered the World Trade Organization dispute settlement process in his first term. Now, in what is now widely termed “Trump 2.0,” the emerging scenario appears to be policy by tweet.

So, what does this mean for Canada’s agricultural industry?

Like in many sectors, industry pundits were gathering around discussion forums this week, consulting with trade experts in search of some insights and perhaps a little coaching on navigating developments that threaten to unravel three decades of mutually beneficial growth.

Panellists on a webinar hosted by the Canadian Agri-Food Policy Institute warned the next four years will be chaotic. No surprises there.

In just one example of how integrated the agricultural economies between the two countries have become, it’s common for calves born in Canada to be shipped to U.S. feedlots for fattening, processing in a U.S. slaughterhouse and the meat sold back to Canada.

In addition to the possible imposition of import tariffs, there is also the spectre of a new version of country-of-origin labelling rules that require meat sold as U.S. products to be born, raised and slaughtered there.

Meredith Lilly, an international trade policy researcher with Carleton University in Ottawa, advised stepping back and borrowing a page from hockey legend Wayne Gretzky’s playbook.

“We get our backs up very quickly and sometimes we can’t recognize where the deeper story might be going,” she said. “Look at where the interests lie, and the overused Canadian expression ‘to where the puck is going.’”

Trump likes to win. One way for Canada to give him one is to honour the spirit as well as the fine print in the increased market access for dairy the Americans thought they were getting when NAFTA was renegotiated into CUSMA.

It’s complicated to explain, but suffice to say adopting a more U.S.-friendly way of interpreting the tariff-rate quota allocations is a compromise that doesn’t unravel the supply management system.

The agricultural trade pundits cautioned against splintering into factions, sectors and regional blocs or throwing Mexico under the bus. Canada needs to develop stronger relationships with potential allies in the U.S., particularly in the farm sector that largely voted for Trump, they said.

“His favourite negotiating tactic is ‘divide and conquer,’” said Carlo Dade, director of trade and trade infrastructure at the Canada West Foundation.

Meagan Murdock, vice-president at Hill & Knowlton, said one of the biggest difficulties for industry is the posturing over who speaks for Canada given its minority government, unpopular prime minister and a pending election call.

“I think the ‘Team Canada’ approach is at risk, which is unfortunate, but that’s what the silly season of a political election year does,” she said.

CAPI managing director Tyler McCann said while diversifying Canada’s export markets has been a long-standing goal, the main growth has been to the U.S. market.

“We’re going into a period of chaos, but we have come out of a period of 30 years of relative stability and that has really worked to our favour. Trying to replace that with something else is going to be extremely challenging,” he said.

Laura Rance is executive editor, production content lead for Glacier FarmMedia. She can be reached at lrance@farmmedia.com