WESTERN PRODUCER — Just as it looked like a trade deal with the United States was finally possible, Canada ended up back at square one, dealing with more tariffs and more trade uncertainty with little relief in sight.
So, what comes next for Canadian agriculture?
Among the ashes of the deal are hidden several lessons for the sector, some new and some persistent.
Panellists at a webinar hosted by the Canadian Agri-Food Policy Institute on Aug. 27, discussed some of these takeaways from the collapse of the Canada-U.S. trade deal and what they may mean for Canadian producers and agriculture policymakers.
Political changes in U.S. won’t erase the problem
There has been some speculation about Prime Minister Mark Carney’s play to sway the U.S. midterm elections toward a more favourable outcome for Canada, but Lisa Raitt, a member of the Federal Advisory Committee on Canada-U.S. Economic Relations, said she doubted political changes in the U.S. would bring the end of tariff pains.
“I think the midterms and the results of the midterms have zero impact on what’s happening,” Raitt said.
“I don’t think it drives the Trump administration back to the table necessarily.
“I don’t think that if there were more Democrats in Congress, for example, they’re going to take up the challenge to right the wrongs with respect to trade with Canada. I don’t think that’s on the top of their agenda.”
Raitt, a former MP and shadow finance minister, said in her experience with the U.S., Democrats will often put a policy in place and Republicans will carry it on, and vice versa.
“I think we have a real trade issue to deal with, and we’ve got to deal with the administration.”
America’s play on dairy
With the issue of dairy having apparently been settled in trade talks, it may be the government considered changes in the tariff-rate quota administration, said agri-food analyst Al Mussell.
“Based on the work that I do, I think this would be costly for the Canadian dairy industry,” said Mussell, who recently authored a policy note on how TRQs could serve as one of Canada’s options for dairy negotiations with the U.S.
“The TRQs for dairy products that are in demand in Canada, which are cheese, butter, cream, etc., they’re already filled,” Mussell said.
“So when they’re already filled … why care about the TRQ administration? I think the reason to care is that the U.S. interest is to export to Canada as high a valued product as possible.”
He said the U.S. could have been making a play for more influence over retailers.
“If it’s oriented more towards premium products, presumably that presents a prospect that some of the Canadian premium dairy products will be chased out of that space, which is a loss to Canadian dairy processors.”
How (not) to support struggling farmers
Joseph Glauber, Research Fellow Emeritus at the International Food Policy Research Institute in Washington, D.C., offered a U.S. perspective on the impacts tariffs have on farmers.
In the U.S., income levels on farms have remained high. Glauber said this is largely due to the amount of money the government has been pumping into them.
“If you look at the major indicators like gross or net farm income or land values or any of those things, they look great,” he said.
“But farmers look down the road and say, ‘Well, what happens if these payments don’t continue?’”
He said the aid often comes as blanket payments, in some cases passed in Congress and in others “obscure budget provisions that allow them to give supplemental aid when farmers are hurting.
“As a consequence, I think the criticism that a lot of people would leverage is that there’s some that haven’t been helped enough, and others have been helped, you know, too much.”
He said there may not be any positive lessons for Canada to learn from this as farms feel the price pinch of tariffs.
“The classic argument about subsidies is they’ll distort decisions and other sorts of things over the long run,” Glauber said.
“You want to make sure whatever you’re doing with payments is that you’re not encouraging farmers to ignore market signals.
“It’s a bit of a moral hazard for the government. … It allows them to do anything, it … allows the bull to go through the china shop and someone’s following the bull with a big chequebook saying, ‘Don’t worry about this.’”
What it means for CUSMA and investment
Raitt said the Canadian government’s initial strategy on U.S. trade came in three main steps:
- prevent the proposed Section 338 tariffs
- get some relief on existing Section 232 tariffs, and
- eventually find a way back into Canada-U.S.-Mexico Agreement negotiations.
The concern now is the renewed uncertainty and what it means for business investment.
“They’re holding back on making decisions on investment,” Raitt said.
“They’re holding back on business plans. They’re holding back on development.”
Craig Johnston, chief economist at Farm Credit Canada, echoed the sentiment.
“We’re in a world of tariffs right now, it seems, between, unfortunately, the two countries,” Johnston said, “and that is having an effect on business investment in both countries, but certainly is having a strong effect in Canada.”
He said the impacts of past U.S. tariffs, including the “Liberation Day” round of 2025, have not been as drastic as initially anticipated but have still damaged many business-to-business relationships.
“That’s really the focus of our attention, is trying to identify those and think about how best we can support those businesses.”
Where Canada falls short
Several panellists said the trade war has emphasized some areas for improvement in the Canadian agriculture sector.
“We’ve got some work on productivity,” Mussell said.
“I’m not going to say anything that’s particularly new here, but we’ve got work to do on productivity, and badly needed work.”
One challenge, he argued, is that Canada is not a major producer of anything.
“Along with everything else, we’re gonna be challenged to have scale,” he said.
“So, we’re export players, but we don’t deal in the mass volumes that really get the unit cost down, etc.
“We’re going to be challenged to have scale. … Again, this isn’t a new problem; it’s just highlighted by the crisis that we’re in today.”
Johnston said the Canadian agriculture sector is now at an inflection point — being able to capitalize on growing food demand and a global appetite for trade diversification.
“I think there’s a strong opportunity in front of Canada to capitalize on that, but it’s going to require investment.”
What can farmers do?
Raitt offered two pieces of advice for Canadian farmers and ranchers now staring down another trade war.
“First of all, if you have any connections and contacts and clients on the other side of the border, please do encourage them to let their congressperson or their senator or their legislative representative know that Canada is so important to their own economic well-being, and that a quicker resolution to this is far preferable than something going on for years and years and years,” she said.
The second piece of advice was more domestic.
“Talk to your lender,” she said.
“Or if it’s your bank, talk to your relationship manager. Figure out what’s going on. There’s programming available from the Canadian government that may be of help. And if it’s not of help, then you should definitely tell somebody that they need to have a better program in place.”
About the author
Reporter
Jonah Grignon is a reporter with GFM based in Ottawa, where he covers federal politics in agriculture. Jonah graduated from Carleton University’s school of journalism in 2024 and started working full-time with GFM in Fall 2024, after starting as an intern in 2023. Jonah has written for publications like The Hill Times, Maisonneuve and Canada’s History. He has also created podcasts for Carleton’s student newspaper The Charlatan, Canada’s History and Farm Radio International in Ghana.
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