REGINA, Sask. — We break down the expanding political and economic fallout in the border states, explore how rising freight and steel costs are battering Yorkton agricultural processors, and hear how the Pacific Link pipeline is pulling billions of dollars in capital back into the Canadian energy sector.
Podcasts are available now on GX94, Yorkton, or on 620 CKRM, Regina, hosted by Steven Wilson. Or read the transcript below:
Steven Wilson — Welcome to Trade Dispute: Impact on the Prairies. I'm Steven Wilson. Federal Conservative leader Pierre Poilievre is breaking from the federal government's hardline stance on the cross-border trade war.
Poilievre traveled to Detroit, Michigan yesterday to pitch a tariff-free auto pact to representatives from General Motors and Ford. He publicly urged Prime Minister Mark Carney to return to the negotiating table, stating that while Canada has longstanding grievances with the United States, the focus must be on what the two countries can do together. A new analysis from Modern Diplomacy suggests Canada's recent pivot away from Washington is about survival and gaining room to maneuver rather than completely escaping the American orbit.
However, a newly published Atlantic Council policy memo warns that Canada's $20 billion counter tariffs are highly politically salient. The authors say the tariffs are designed to squeeze localized American producers who rely on Canada for upwards of 75 per cent of their market share, putting key states on the chopping block ahead of the United States' midterm elections. The scramble for alternative markets is intensifying on both sides of the border.
The Manitoba government announced yesterday that a provincial delegation is joining a Team Canada trade mission to India. Ironically, the governor of Montana is currently leading his own trade mission to India to seek non-American capital. Montana's lieutenant governor also signed a 45-day executive order temporarily suspending dyed fuel provisions for commercial vehicles transporting agriculture, livestock feed, and timber.
In North Dakota, the United States Department of Agriculture's Daily Grain Report shows corn and wheat bids dropping across central and eastern hubs due to restricted northern export routes. For Canadian businesses, the ongoing trade war is forcing a fundamental rewrite of cross-border strategies. Trailer manufacturer Trout River announced it is completely abandoning its American growth plans to focus strictly on Canadian customers after absorbing nearly $1 million in punitive tariffs.
In Saskatchewan, agricultural processors are dealing with severe secondary supply chain shocks. Mike Popowich is the owner of TA Foods, a bulk flax seed processor in Yorkton. While bulk flax exports have largely escaped direct tariffs, he says freight inflation and border uncertainty are sending transportation costs through the roof.
Mike Popowich — Probably at this point, without anything actually being in place for tariffs on flaxseeds and egg commodities right now, probably the biggest problem that we have right now is the fuel costs are massive and we've seen jumps from our main suppliers in the freight industry every month or two over the last eight months. The price of diesel affects the trucking industry tremendously and affects the costs that we can take on to get the product not just into the United States but even to Western Canada or to Eastern Canada where we supply a lot of our products too. Those costs, as soon as we get a chance to reprice products, which we are right now at this time of year, is generally when we're repricing a lot of the products.
We buy the flax from farmers at harvest time, which is the most normal time for us. Because of that, a lot of our customers want their contracts redone at this time of year. With the price of freight being almost double what it was 18 months ago, all of our customers are seeing higher costs from the ingredient supply industry and those costs get pushed directly down into the ancient grain breads that you see at the grocery store that our flax is used in and stuff like that.
It goes right into the cost of everything really fast.
Steven Wilson — Terry Tyson, president of Grain Millers in Yorkton, echoes that sentiment. While finished products remain tariff-free so far, he says the cost of replacing heavy equipment and steel components has shot up 50 per cent. He says those costs will inevitably reach the grocery store checkout.
Terry Tyson — Where we do see an impact is certain goods from Canada into our U.S. mills are tariffed and certain things that our Canadian presence uses are tariff-like steel products. We have a lot of pneumatic conveyance in our facilities and steel piping and couplings and all of that stuff now costs 50 per cent more than it used to. Those things wear out, you've got to replace them and so there's really no way around it.
You just have to pay more. The reality of that is that industries like ours tend to be high volume, low margin industries. You make hay by maximizing throughput and it's really a volume game.
The point of that being that there isn't a lot of room to absorb those additional costs and the result in that is that eventually those start to work their way down the value chain and ultimately they hit the consumers on store shelves.
Steven Wilson — While the agriculture sector grapples with inflation, the energy sector is seeing a massive surge of domestic investment. Jon Tupper reports from Fort McMurray on how Prime Minister Mark Carney's recent pipeline approval is drawing capital back home.
Jon Tupper — Turmoil in the Middle East is continuing to stress global oil supplies and raising the price of gas and diesel throughout Canada and the United States. Meanwhile, interest in Canadian energy is up with shares of the big three oil sands companies climbing sharply over the past week. The gains follow Prime Minister Mark Carney's announcement of the Pacific Link pipeline, which would carry one million barrels of Canadian oil per day to the west coast and open greater access to Asian markets as Canada looks to reduce its reliance on U.S. trade. Earlier this month, Carney told Harvard Media News investors are bringing more capital back home.
Mark Carney — Canadian capital, the Canadian banks, the Canadian pension funds, the Canadians put up more than 400 billion dollars of their own money to build in Canada.
Jon Tupper — Carney says the shift toward new markets and domestic investment could strengthen Canada's position amid continuing trade and tariff uncertainty.
Mark Carney — Money's coming back home, it's going to create great jobs for Canadians, a very clear pathway to a stronger Canada, stronger Alberta.
Jon Tupper — In Fort McMurray for Harvard Media, I'm John Tupper.
Steven Wilson — We will continue to follow the local and global fallout as businesses adapt to the border dispute. I'm Steven Wilson. Thank you for listening to Trade Dispute: Impact on the Prairies.
Listen weekdays @9 am to 620CKRM and GX94 for new installments of Trade Dispute: Impact on the Prairies.
