P.E.I. exporters looking to adapt as Canada-U.S. trade war begins

CBC

04-03-2025

Prince Edward Island exporters are looking to adapt to the new trade reality after sweeping U.S. tariffs went into effect early Tuesday.
The North American trade war of 2025 has officially begun with Canada hitting back against the U.S. after President Donald Trump imposed punishing 25 per cent tariffs on virtually all incoming Canadian goods just after midnight.
In response, Canada hit back with an initial $30 billion in tariffs on U.S. goods exported to this country, with the promise to add another $125 billion more in retaliatory measures in three weeks' time if the U.S. tariffs haven't been lifted.
Ray Keenan, co-owner of potato processor Rollo Bay Holdings in Souris, said his company has been working to ensure shipments continue moving smoothly.
"We're in the process of getting some paperwork done with custom brokers to facilitate the movement," he told CBC's Island Morning.
"We're also in constant contact with our customers, who depend on us. We've been part of the supply chain in this province for over 100 years. So this just doesn't go away in one night, because we are an integral part of their system."
He noted that many American buyers rely on an affordable supply of Canadian potatoes. Without them, spuds would have to come from elsewhere, likely the western U.S., where higher freight costs could drive up prices.
"We'll see what happens in the next 24, 48 hours for sure," Keenan said.
Beef industry watching closely
Russ Mallard, president of Atlantic Beef Products, said the beef industry has yet to see any immediate effects but it remains on high alert for potential impacts.
"Once we understand what we have to adapt to, I think that as a country, we'll adapt," Mallard said.
Mallard said he's also preparing for the potential that the exchange rate could help mitigate some of the tariffs' impact. A weaker Canadian dollar could make exports slightly more affordable for American consumers.
"Beef is still required in the U.S. If the exchange rate and the demand for beef goes up to such a point where domestic beef costs more, then perhaps our beef will not stop going into the States," he said.
Mallard recently returned from a trip to Washington, where he joined industry groups and politicians advocating for Canada's interests. He said the goal was to convey to stakeholders the potential economic damage of the tariffs.
Both Keenan and Mallard believe rising prices in the U.S., especially for products like eggs because of flock culls related to avian flu outbreaks, will likely fuel inflation and lead to growing dissatisfaction among American consumers. That would include farmers, many of whom likely voted Republican, and "that's going to send a message," he said.
"We're hoping that if he won't listen to anybody from Canada — which he probably won't — he may listen to his own base," Mallard said.
"They're always going to be our neighbours, and eventually this too will pass."
Shifting away from U.S. not easy: CFIB
On Tuesday, interim P.E.I. Liberal leader Hal Perry urged the provincial government to take action. In a news release, he called for the immediate removal of American alcohol from provincial liquor store and outlet shelves and the cancellation of the NHL deal. He also emphasized the need for a clear strategy to address the tariffs' impact.
Both Keenan and Mallard also believe governments must step up to support Canadian businesses and protect jobs.
They said it's crucial more than ever to remove interprovincial trade barriers, including eliminating the cost of crossing the Northumberland Strait by bridge or ferry. They also believe Canada should strengthen trade relationships beyond the U.S., looking to markets such as the European Union and Mexico.
However, shifting away from the American market will not be easy, said Frédéric Gionet, director of legislative affairs for P.E.I. with the Canadian Federation of Independent Business.
P.E.I.'s largest international export market is the U.S., and many exporters have established relationships there for decades. Moving to other markets is going to be difficult since it costs more to ship overseas, and breaking into new markets means competing with other countries now supplying those goods, Gionet said.
"To make Canada attractive to these markets, we'll need to make sure that our products are the right quality and the right price for these things. So we're going to be competing against many other countries that produce food," he said.
"P.E.I. is going to have to find its niche in this new world — and I don't doubt that it'll happen, there's great products coming out of P.E.I., great quality — but you know, the disruption will be real."
Looking ahead, Gionet said businesses and industrial sectors must prepare for the long-term reality of tariffs.