Canada’s hefty retaliatory tariffs on $27.6 billion of US goods that took effect just past midnight today could hit the food and farming industry hard – but stakeholders across the value chain are far from united on what should happen next.
“Effective Sept. 8, Canada will impose counter tariffs of up to 15, 25 and 50% on $27.6 billion in imports from the United States of America,” in response to tariffs of 50% on approximately $28 billion in Canadian goods imposed by the US on Aug. 22, Canadian Finance Minster Francois-Philippe Champagne declared in late August.
He explained that Canada had to respond “in a proportionate, targeted and strategic way” – a sentiment that Former Prime Minister Jean Chretien echoed in an interview with CBS news.
“We have to stand up when there is a bully in front of you,” he told CBS news chief correspondent Adrienne Arsenault.
He added the tariffs will punish both countries, but if needed Canada could go farther. He noted that the US excluded tariffs on oil, gas, electricity and potash – a popular fertilizer that has become increasingly expensive as US President Donald Trump imposes tariffs around the world and due to other ongoing geopolitical tensions.
The US needs these goods “very badly, so perhaps one day we will have to impose on them an export tax,” Chretien cautioned.
For now though, the retaliatory tariffs that could hit the food and ag industry hardest focus on dairy; sweeteners like molasses and honey; malt extract; proteins from milk; packaging components such as uncoated kraft paper, various paper and paperboard, cartons, boxes and other containers; and various types of steel, including flat-rolled products; and agricultural equipment, among others.
The breakdown in negotiations comes amid increasingly personal attacks with Trump calling Canada weak and Canadian leaders countering the US President’s actions – such as an Aug. 27 Executive Order renaming Lake Ontario to Lake America – as weak, cheap and nasty.
Industry reactions split as tariff war escalates
Some US industries back tariffs, while agricultural groups warn of retaliation.
For example, the dairy industry’s position has evolved as the dispute has shifted from a broad tariff fight to a fight over Canadian market access.
US dairy groups initially warned that a tariff fight with Canada could threaten an important export market. Their position has since become more supportive of targeted tariff pressure, as the administration has tied the measures specifically to Canada’s dairy market-access policies.
In July, when the White House announced a 50% tariff on dairy imports from Canada, the National Milk Producers Federation said it supported the Trump administration’s “commitment to standing up for dairy farmers and manufacturers.”
US Dairy Export Council President and CEO Krysta Harden accused Canada of intentionally misusing its tariff-rate quote system to impede the full use of the US-Mexico-Canada trade agreement dairy quotas.
“Canada simply cannot continue to discriminate against US dairy farmers by effectively blocking negotiated access to its market. It is well past time for Canada to negotiate in good faith and tackle the outstanding USMCA dairy implementation issues to help drive a successful conclusion of the USMCA review,” Gregg Doud, president and CEO of the National Milk Producers Federation, said in a July 20 statement.
Steel supports aggressive tariffs
Likewise, US steel groups lauded the initial 25% tariff and the administration’s decision to raise it to 50% in July.
In a joint letter sent to Trump July 25, five groups representing the American steel industry urged the retention of steel tariffs during ongoing bilateral negotiations on other tariffs.
In August, after trade negotiations broke down, the Canadian Steel Producers Association noted its support for Canada’s decision to match US steel tariffs at 50%.
It added, “no deal is better than a bad deal, and we continue to have confidence in the Canadian negotiation team in finding a durable, successful path forward.”
Fallout from tin tariffs is already hitting the food industry hard with the Campbell’s Co., which sources significant tin for its iconic canned soups, calling out inflation as particularly detrimental to its margins in the past year.
Agriculture and commodity groups urge ongoing negotiations
Not everyone views aggressive tariffs as the right recourse.
The American Farm Bureau Federation, for example, has repeatedly urged the US and Canada to “return to the negotiating table to find a resolution.”
In August when trade talks between the countries broke down, AFBF President Zippy Duvall cautioned “additional tariff escalations and subsequent retaliation will hurt US agriculture at a time when farmers and ranchers are already struggling.”
The National Pork Producers Council similarly expressed concern about the negative impact of devolving negotiations and called the USMCA “mutually beneficial.”
Canada and Mexico account for about a third of US pork exports, the group said July 1, making preservation of USMCA market access critical to producers.
Ongoing fallout
The split underscores the difficult position facing North American food and agriculture businesses as the trade dispute continues. While some industries see tariffs as necessary leverage to address long-standing market-access concerns, others warn that retaliation threatens the export markets and integrated supply chains on which they depend.
With negotiations still unresolved, businesses on both sides of the border are left navigating a trade relationship in which the policy that protects one sector can quickly become a cost for another.
