Ottawa-The agriculture sector needs to hope for the best and plan for the worst as President Trump decides whether to hit Canada with tariffs, says Tyler McCann, Managing Director of the Canadian Agri-Food Policy Institute.
The possibility of 25 per cent tariffs on Canadian products has been delayed to March 1 so Canada can show what it is doing to bolster its border surveillance for fentanyl and illegal guns.
“The threat of tariffs has exposed vulnerabilities in Canadian agri-food, including an export concentration in the U.S., challenges with innovation and growth and underscores the need for concerted efforts to address these structural issues,” McCann said.
Canada should use the delay to double down on developing a more comprehensive response to the threat of U.S. tariffs rather than just imposing tariffs on American imports, he said.
Those measures should include support for impacted businesses, which could be done by working through Farm Credit Canada and other institutions to offer loan guarantees and liquidity support, expanding the Advance Payments Program limits and relaunching the Canadian Emergency Business Account.
Other actions could include waiving fees for export certificates, using the Business Risk Management program to provide advances and introduce an Accelerated Capital Cost Allowance on farm and food processing equipment.
The government should also double down on market access by prioritizing political and technical resources to resolve market access barriers, including on meat exports to the EU and canola exports to China. It could also increase AgriMarketing Funding with a more flexible approach targeted at diversification, new strategies and more proactive export promotion. Another useful step would be eliminating the carbon tax to support the sector's competitiveness.
Agriculture Canada’s deputy minister should chair a working group to develop targeted solutions for food processors that will feel the brunt of the tariffs. The government should also halt new regulatory initiatives that may impose unnecessary burdens and launch a process to remove existing regulatory burdens hindering competitiveness.
Beyond these immediate actions, the government should develop a strategic trade agenda focused on concluding and reinvigorating trade negotiations and the WTO as well as working with international partners, possibly alongside the G7, to improve collaboration in the face of U.S. threats.
Agriculture Canada should also develop a critical farm input strategy to reduce the reliance on U.S. supplies, including fertilizers, crop protection products, food ingredients and packaging.
The federal and provincial agriculture ministers should aim to implement an action plan to remove internal trade barriers and harmonize regulations during their July annual meeting.
Thinking long term, McCann recommends the federal-provincial Ag Policy Framework should be reinvigorated, focusing on stability and growth through productivity and market development. It should also reinvigorate innovation in the sector through targeted programs and regulatory reform to improve the competitiveness of farmers and food processors.
Canada also needs to focus on improving trade reliability including expediting trade infrastructure funding, acting on the Canada Trade Infrastructure Plan and National Supply Chain Taskforce and legislating measures to mitigate labour disruptions to critical supply chains.
Governments should also support value chain initiatives to add value in Canada through more processing, differentiation and specialization. They should also explore new ways of leveraging food security to deepen relationships with major importers, including Japan and China.
It is also important to remember that in the event of a trade battle with the U.S., “all Canadians will experience higher food inflation. Actions will need to be considered to address those impacts.”
This news item prepared for National Newswatch