Donald Trump has threatened to impose a 25 per cent tariff on all Canadian products entering the U.S. beginning Jan. 20, the day he is inaugurated.
And given that Canada’s southern neighbour is one of Alberta’s top export markets for key agricultural products like beef, the prospect of such punitive trade sanctions has left industry groups bracing for impact.
Economists say that while it’s too soon to tell what the details of the new arrangement will bring, the proposed sanctions would undoubtedly re-arrange long-standing trade flow patterns and discourage U.S. buyers from buying Albertan products.
In 2023, Alberta exported nearly half of its food and agriculture products to the U.S., at a value of $8.79B. That figure includes 90 per cent of the province’s bovine meat, valued at $2.9B, alongside 100 per cent of the province’s live cattle exports.
On the crop side, 85 per cent of Alberta’s canola was sent to the U.S. last year.
Disruption of long-held trade patterns
J.P. Gervais, chief economist with Farm Credit Canada (FCC), said Canadian and Albertan agriculture supply chains are highly integrated with those in the U.S., meaning that any kind of disruption at the border, in this case one that would spike prices of Canadian products, would have wide-ranging consequences.
For one, the tariffs would decrease the amount of Canadian products actually sold, said Gervais.
“We know that if you raise the price of a commodity through tariffs, buyers are going to buy less of it.”
The tariffs would also touch all levels of the supply chain, said Gervais.
Ninety per cent of Alberta’s bovine meat, alongside 100 per cent of the province’s live cattle exports, went to the U.S. last year. (Fran Wilkinson/Facebook)
In the cattle industry for example, tariffs would be applied on both live cows being marketed to the U.S. by feedlots, as well as finished products supplied by meat-packing plants, which Gervais said would have ripple effects all the way down to ranchers themselves.
That could lead to a potential drop in beef prices for Canadian consumers, said Gervais, if more product floods the domestic market that can’t be sold at a higher price at the border.
Overall though, Gervais said Trump’s proposed sanctions would create instability for agriculture groups moving forward.
“[Agri-food supply chains] have been built on the basis of transparency and predictability.
“If you talk to businesses, what they don’t like is the lack of predictability when it comes to what’s going on in the markets because that makes it more difficult for them to make decisions, especially when it comes to investment over the long term.”
Provincial government calling on feds to take action
Alberta Beef Producers (ABP) said the imposition of the potential tariff threatens the stability of the “important” trade relationship between Canada and the U.S., in a statement to CBC News.
“Our team is conducting thorough due diligence in monitoring and engaging on this issue,” said Brodie Haugan, the chair of ABP.
“We are dedicated to safeguarding the interests of Alberta cattle producers and ensuring a sustainable future for our industry.”
In a statement, Alberta Canola said Canadian-grown crops have benefited multiple aspects of the U.S. economy, from transportation to refining, and that it will continue to work to “ensure that the value and importance of this mutually beneficial trading relationship is well known and understood by the incoming U.S. administration.”
Minister of Agriculture and Irrigation, RJ Sigurdson said he agrees with Premier Danielle Smith that the federal government should take action to prevent U.S. President-elect Donald Trump’s tariff threat from materializing. (YourAlberta/Youtube)
Premier Danielle Smith has expressed her desire for the federal government to step in to take responsibility for staving off the Trump administration’s “devastating” tariff threat.
Alberta Minister for Agriculture and Irrigation RJ Sigurdson said he shares the premier’s concerns about the possible sanctions.
“Alberta’s government is calling on the federal government to work with the incoming administration to resolve any issues immediately, thereby avoiding unnecessary tariffs on Canadian exports to the U.S.,” he said in a statement to CBC News.
“We will work with the incoming administration, industry and the federal government to ensure our food producers and processors’ voices are heard.”
Some possible opportunities
In terms of a silver lining to the potential tariffs, Brenna Grant, the executive director of CanFax, said it could provide an opportunity for Alberta beef producers to fill a gap in the global supply of beef.
That’s because a U.S.-imposed import tax on Canadian beef products could have the inverse effect of making American beef more expensive to export.
“The purpose of a tariff is to increase the domestic price.… As the [U.S.] domestic price increases, the domestic market becomes more attractive and reduced imports discourage exports in order to keep domestic supplies steady,”Grant said in an email.
“Smaller U.S. beef exports will create opportunities internationally for other exporting countries (like Canada) to fill that demand.”
Gervais added that tariffs could also act as a push for Albertan agriculture producers to pivot to new markets, although the timeline for how quickly this could happen is unclear.
“Diversification is nothing new, I mean, we’ve been talking about diversifying exports away from the United States for a while,” he said.
“But then the bottom line is that diversification in practice is difficult to achieve. Because you need to establish relationships with buyers, you need to work on marketing plans and so forth.
“So it’s not impossible … but it may take some time for sure.”