Tariffs. It’s the word that has sewn uncertainty across a wide range of industries on both sides of the Canada-US border since President Donald Trump has threatened, launched, and delayed tariffs on billions of dollars in Canadian products, with Canada responding in kind.
Canadian and American farms and agri-businesses stand to be directly impacted by a trade war with no known end in sight. It’s not great news here in Haldimand County, where agriculture is a vital part of the local economy.
Bob Henley, owner of Dunnville-based Egger Truck and Machine, said tariffs was all anyone could talk about at a recent trade show he attended.
“Everyone’s asking us as dealers how it will affect us going forward, but we have no answers. Sure, it will hurt us as dealers as people will want to hold tight with these uncertain times,” said Henley. “The general consensus is that they probably won’t last long, and people are also wondering if it is just a distraction from other things going on within government.”
He said that while his business does import some US products, he is confident he can find those same items from a Canadian supplier.
OFA President and Binbrook-based dairy farmer Drew Spoelstra wasn’t as optimistic, noting that the issue has already impacted daily cross border trade, with uncertainty around how products should be handled, what tariffs should be applied, and how to move forward with the impacted products.
“Things like beef, pork, fresh fruits and vegetables, and flowers are seeing the biggest impact. The longer the tariffs are applied, or the threat exists, it will impact agricultural goods more broadly,” said Spoelstra. “60% of our Canadian agricultural products are exported to the US.”
That uncertainty places additional pressure on local product exporters, making it difficult to plan for the cropping year and even the overall future of the business, according to Spoelstra.
“Tariffs could last a month, a year, four years, we just don’t know,” he said. “We have an agreement in place with the US and Mexico and we honour as Canadians the terms of the agreement. At some point it will be renegotiated, which creates more challenges but may yield a final result to these concerns. No one wins in a trade war like this. Business and consumers will face unprecedented challenges that will be difficult to overcome for many.”
While the delays in the rollout of some tariffs – as the two countries trade threats back and forth – is allowing local producers to move product across the border for the short term, Spoelstra said that flower, pork, and beef exporters have already seen impacts, with US importers pricing added costs into goods that might be counter tariffed by Canada.
Approximately $900 million in flowers cross over the US border annually, while 85% of Canadian greenhouse vegetables follow suit.
“We can’t eat enough vegetables in Canada to make up for a loss in the US market,” warned Spoelstra.
He noted that Trump’s threatened 25% tariff would either be “priced into the market or passed on to the grower in some way,” leading to less profit for producers, which could spell disaster for businesses with a tight margin.
“Couple that with added costs for retaliation on imports to Canada and financially things get very difficult,” he added.
He gave an example of a single hog crossing the border and the impact a 25% tariff would have: “This is a loss of around $65 a hog and it will devastate the industry.”
Further complicating the issue, Spoelstra noted how retaliatory Chinese tariffs (in response to Canadian-imposed tariffs on Chinese-made electric cars, steel, and aluminum products issued last October) are also now in place on certain products like pork and canola oil.
Spoelstra said the OFA is actively promoting buy local campaigns and opportunities to shop for Canadian products, encouraging people to patronize their local farmers’ markets for fresh, Ontario-grown products, and to look for Canadian-made labels at the grocery store.
There are also some tools available to help local farmers through the short term, such as Agri-Stability and the provincial risk management program, but Spoelstra called those “band-aid solutions that aren’t designed to respond to this type of devastating threat.”
If the trade war plays out long-term, “producers will need significant help to weather this storm and significant investments in processing capacity should be made to add value to our raw products and find new market destinations around the world.”
Christos Shiamptanis is an associate economics professor at Wilfrid Laurier University. He shared some further insight.
“Looking at some data we have from the 2021 census of agriculture, Ontario accounts for over 25% of the total farms in Canada,” he said.
He warned that Canada’s counter-tariffs on critical agriculture products like fertilizers, feed, or equipment will drive the cost of Canadian production and operations up, “especially if farmers are mainly using imports coming from the US,” ultimately forcing some farmers to lower their production targets – reducing the supply of Canadian agricultural products – while at the same time being forced to consider lowering prices on their goods to remain competitive.
While some agricultural products can be stored, an oversupply of perishable items in the fall could lead to major losses for farmers who miscalculate the demand for their goods.
“We have two forces, the US tariffs putting a downward pressure and the Canadian tariffs putting an upward pressure. We don’t know which is going to prevail,” said Shiamptanis. “Farmers are asked to work in that environment where it’s unclear which of the two effects is going to work.”
He also warned that the uncertainty in the industry will spill over into the consumer mindset as well.
“With uncertainties, people become more precautionary in their spending,” he said, noting how consumers could choose less expensive options should fresh items prove unaffordable.
Shiamptanis believes larger operations might be able to absorb more costs, but they also face more significant risks in the light of tariffs due to their higher exposure to the US market, forcing them to focus more on paying existing debt than producing and selling.
“Small farms are usually selling directly to Canadian consumers,” he noted. “They won’t be as affected, but of course there could be a case where a small farm is exclusively serving the US; that small farm will be affected the worst.”
To adapt, Shiamptanis said farmers will need to look at diversification.
“I think this applies to every Canadian farm. They need to try and look at other markets. We need to look beyond the US. We need to look at Europe, Asia, Latin America. We need to try and sell Canadian beef, pork, wheat, canola to China, India, Japan, and the European Union.”
He noted how trade tensions between US and China during Trump’s first term created a window for Canadian soybean farmers to start exporting to China.
Searching for positives, Shiamptanis hopes to see provincial trade barriers removed, and that farmers across the country will adapt and learn to work together as partners rather than competitors.
“That takes a change in mentality,” he said. “It’s up to the farmers to see how comfortable they are in connecting with other farmers in Canada, even within the province.”
He concluded, “I’m not a supporter of tariffs, absolutely not, but what it does is it makes us go back and see how we are doing things, how can we switch.”
Spoelstra concluded, “The uncertainty farmers are facing in the marketplace right now is unprecedented. We don’t know from day to day, month to month, what the future will look like under a continued economic threat from the US. It’s important that we do our best to buy Canadian, buy local, and support Ontario grown products wherever possible.”
