With threats of a 25 per cent tariff looming ahead of U.S. President-elect Donald Trump’s inauguration in late January, Canadian producers are left planning for the unpredictable and volatile months ahead.
Why it matters: U.S. tariffs on Canadian exports could hurt trade with Canada’s largest trading partner.
John Treleaven, international trade consultant and former Canadian ambassador to the Philippines said it will be important for Canadians to avoid jumping to conclusions.
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“Actions speak louder than words. It’s best if we react to actions rather than get spooked by words,” he said.
“On the other hand, you know, ‘plan for the worst and hope for the best’ is another useful way of approaching this.”
If the tariffs do come into effect, Treleaven said it would not take long for American consumers to feel the financial fallout.
“Let’s say there’s a 25 per cent tariff on canola from Canada,” he said. “Well, what’s going to happen, among other things, American buyers are going to look to, I don’t know, Australia.”
Transaction costs will skyrocket, he noted.
“You can’t, in the end, raise the costs to American consumers at a time when you’ve promised them that you’re going to lower food costs,” he said. “This is a trainwreck. It just depends how long it takes for the trains to run into each other.”
In a December newsletter, the Canadian Agri-Food Trade Alliance (CAFTA) said that Canada “cannot afford to prioritize protectionism” amid threats from Trump.
“In an increasingly uncertain global climate, Canada must remain engaged in a rules-based trading system and partnerships that promote free, fair, and mutually beneficial trade,” the organization said. “Disengaging would leave Canada economically weaker and less secure in both the short- and long-term.”
Grain Growers of Canada executive director Kyle Larkin said he is taking everything Trump says now with “absolute seriousness.”
“I think the only thing we can do is plan accordingly and build more relationships or strengthen the relationships that that we already have,” Larkin said.
“We’re working very closely with the current minister of international trade, the minister of industry, who’s been charged with the U.S.-Canada relationship, and ambassadors, diplomats and Global Affairs Canada at large, to ensure that they’re aware of how important this trade relationship is to grain farmers.”
There’s little farmers can do on their own operations to prepare, he noted, but added that they would benefit from getting involved with commodity organizations or lobbying, as well as engaging with their local MP.
“National associations do have their back and are lobbying on their behalf with the current government and a potential future government,” he said.
