As Donald Trump prepares for his second term, one of the most pressing concerns for Alberta’s agriculture sector is the threat of a 25% tariff on all Canadian goods entering the U.S., set to begin on January 20. With the U.S. being one of Alberta’s largest and most important markets, especially for beef, canola, and live cattle, such tariffs could radically shift trade patterns, disrupt the economy, and create uncertainty for thousands of farmers and ranchers.
In 2023, Alberta exported nearly half of its agricultural products to the United States, totalling a value of $8.79 billion. This includes significant exports like 90% of the province’s bovine meat, valued at $2.9 billion, and 100% of live cattle exports. With such reliance on U.S. trade, Alberta’s farmers are now bracing for the potential fallout.
In this post, we’ll explore the potential consequences of Trump’s threatened tariffs on Alberta’s agriculture sector, the possible ripple effects on supply chains, and the opportunities for diversification and adaptation in the face of these challenges.
The Threat of 25% Tariffs on Canadian Exports
Donald Trump’s recent threat to impose a 25% tariff on all Canadian goods represents a dramatic shift in U.S.-Canada trade relations. Although the specifics of the tariff are still unclear, the potential impact on Alberta’s agriculture exports is a key concern.
Alberta’s Key Exports to the U.S. in 2023
- Bovine Meat: Alberta sent 90% of its beef to the U.S. in 2023, worth $2.9 billion.
- Live Cattle: The U.S. also received 100% of Alberta’s live cattle exports.
- Canola: Alberta’s 85% of canola production was shipped to the U.S.
A 25% tariff on these products would raise prices for U.S. consumers, reduce demand for Canadian goods, and ultimately disrupt supply chains between Canada and the U.S.
Impact on Alberta’s Agriculture Supply Chains
Agriculture in Alberta is deeply integrated with U.S. supply chains. The imposition of tariffs would not only hurt export numbers but also cause a domino effect across the entire agriculture sector. Here’s how:
Higher Prices and Reduced Demand
J.P. Gervais, Chief Economist at Farm Credit Canada (FCC), explains that tariffs increase prices. As tariffs make Canadian goods more expensive, U.S. buyers will likely turn to cheaper alternatives, resulting in reduced exports from Alberta.
- Beef and Cattle: The cattle industry would be significantly affected. Tariffs would impact both live cattle and finished beef products, with meat-packing plants also facing higher costs.
- Crops: Canola exports, a major crop in Alberta, would similarly suffer as U.S. farmers find ways to compete with higher Canadian prices.
This disruption would hurt not just exporters but every level of the agriculture supply chain, from feedlots to meat-packing plants, all the way back to the ranchers.
Potential Price Drop in Domestic Markets
Gervais also pointed out that a decrease in U.S. demand could lead to a domestic glut of beef, which may cause prices to drop within Canada. This could result in a fall in beef prices, affecting both ranchers and Canadian consumers. A glut of cattle could also overwhelm meat processing facilities, further complicating matters.
Uncertainty and Instability
One of the biggest challenges with tariffs is the uncertainty they create. For businesses in Alberta’s agriculture sector, predictability is key when making long-term investment decisions. The tariffs threaten to undermine this stability, leaving agricultural producers uncertain about future trade terms and market conditions.
As Gervais notes, “Agri-food supply chains have been built on the basis of transparency and predictability.” Disruptions like tariffs cause volatility and make it harder for businesses to plan, leading to potential delays and increased costs across the entire sector.
Alberta’s Response to Potential Tariffs
The threat of Trump’s tariffs has sparked significant concern within Alberta’s agriculture industry. Alberta Beef Producers (ABP) and Alberta Canola have already expressed their worries, with ABP chair Brodie Haugan stating that the tariffs would destabilize the crucial trade relationship between the U.S. and Canada.
Premier Danielle Smith has called for federal intervention to prevent the tariffs from taking effect. In a statement, she expressed her desire for the Canadian government to immediately address the issue to prevent what she called “devastating” economic consequences for Alberta.
Minister for Agriculture and Irrigation, RJ Sigurdson, echoed these concerns, stating that Alberta’s government would work with the federal government, industry stakeholders, and the incoming U.S. administration to ensure the voices of food producers are heard in the fight against potential tariffs.
Potential Opportunities Amid the Tariff Threat
While the prospect of 25% tariffs on Canadian exports is concerning, there may be some opportunities for Alberta’s agriculture sector to explore in the face of these challenges.
Global Market Diversification
Brenna Grant, Executive Director of CanFax, suggests that the tariffs could create an opportunity for Alberta beef producers to fill gaps in the global beef market. With higher tariffs on U.S. beef, American producers may reduce their exports, creating a space for Canadian beef to be sold in other countries.
- Diversification: Though moving into new international markets is challenging, Alberta’s agriculture producers have long discussed the need to diversify exports away from the U.S. While this would require significant effort to establish new relationships and marketing plans, it could open doors to untapped demand in markets across Asia, Europe, and South America.
Increased Domestic Demand
If U.S. beef becomes more expensive due to the tariff, there could be an uptick in domestic demand for Canadian beef. Canadian consumers might choose to buy more locally produced meat, which could benefit Alberta’s beef industry in the short term.
However, it’s important to note that this shift may not fully offset the loss of exports to the U.S. if the tariff impacts are severe enough.
Conclusion: Navigating the Impact of Trump’s Tariff Threat
In conclusion, the potential 25% tariffs on Canadian products, including agricultural exports from Alberta, pose a serious threat to the province’s beef, canola, and cattle industries. The disruption of long-standing trade flows, combined with the uncertainty surrounding U.S.-Canada trade relations, leaves Alberta’s agriculture sector facing a difficult road ahead.
While the tariffs could lead to price increases, reduced demand, and instability in the supply chain, there are some potential opportunities for market diversification and increased domestic demand. The key for Alberta’s farmers and ranchers will be adapting quickly to changing circumstances and finding new ways to connect with global markets.
As the situation develops, Alberta’s agriculture industry will need to work closely with both provincial and federal governments to find solutions that mitigate the impact of Trump’s threatened tariffs on their livelihoods.
Photo credit: CBC
