Canadian canola dodges Trump tariff threat, but still faces economic uncertainty

Yahoo

3 days ago

Canadian canola producers appear to have dodged U.S. President Donald Trump's latest tariff threat, which reports indicate would exclude goods covered by the Canada-U.S.-Mexico Agreement, but economic uncertainty remains for many.
The latest round of tariffs threatened by Trump would impose a 35 per cent levy on Canadian imports currently subjected to 25 per cent tariffs, effective Aug. 1.
Canadian-grown canola enjoys duty-free status when it travels across the border, but economic uncertainties associated with the ongoing trade dispute create what southern Alberta farmer John McKee calls "an air of anxiety" looming over the industry.
McKee, who grows oilseed crops southeast of Lethbridge, said while the tariffs don't directly hurt his canola exports, they're taking a toll on producers in other ways, including forcing farmers to deal with duties when ordering equipment from across the border.
McKee said when he looked at ordering "a very small insignificant piece" of equipment from the U.S., he was faced with "extra handling, the extra brokerage fees" and "several extra charges that went along with tracking the appropriate tariff."
He said buying a $20 part from the U.S. would have wound up costing him $100 had he not found a near-identical option locally.
Andre Harpe, chair of the Alberta Canola Producers Commission, said the U.S. tariffs are only one of several issues Canadian farmers are dealing with.
"I think we're almost starting to get used to it now," he said of Trump's recurring tariff threats.
Harpe, who grows canola and barley in northern Alberta, said he and many other producers are dealing with more pressing issues like dry growing conditions.
"We're looking at making sure we can get the best crop that we can get, so we can actually sell them," he said, pointing to diseases affecting crops across Canada, and a need for more rain.
He also said 100 per cent tariffs on Canadian canola oil and canola meal imposed by China in March has been more significant to producers than the country's trade dispute with the U.S.
While those duties do not apply to unprocessed canola seeds exported to China, which made up the bulk of Canada's $4.9 billion in canola exports to China in 2024, Harpe called them "probably the biggest concern right now," in terms of tariffs.
The Canadian canola industry annually contributes an average of $43.7 billion to the national economy, according to the Canola Council of Canada.
The council's figures indicate there are approximately 40,000 canola farms nationwide, primarily located throughout Alberta and in southern Saskatchewan and Manitoba, as well as scattered locations in Ontario and British Columbia.
"The canola industry is a very significant contributor to economic activity in Alberta," said J.P. Gervais, chief economist with Farm Credit Canada.
The U.S. is Canada's largest market for canola exports, making any tariff talk problematic for producers and investors, Gervais said.
"This entire situation with the United States … creates a lot of uncertainty for canola growers that are looking to invest, to grow, and grow exports, generate economic activity across the country, across the province," he said.
"I do think that we have to wait and see, but recognizing as well that the unknowns, the uncertainty that is in the market right now … really has an impact on the ability of operations to actually invest in their bottom line."
He said canola prices took a hit when China first announced its tariffs, but that they have "rebounded quite a bit" this year.
"We thrive in an environment where borders remain open and we have free-flowing products between the United States and Canada, between Canada and China," Gervais said.
Prime Minister Mark Carney is scheduled to meet with his cabinet on Tuesday and with Canada's premiers on July 22 to discuss the latest developments in the U.S. trade dispute.