Ottawa-Falling commodity prices, surging input costs and elevated interest rates are placing Canadian grain and oilseed farmers under mounting financial strain, says a brief prepared for the Lawrence National Centre for Policy and Management.

The result is weakening profitability and constraining investment capacity that is being compounded by U.S. tariffs and Canadian retaliation, says the brief written by Ramsey Andary for the Centre which is affiliated with the Ivey School of Business at Western University.

The trade dispute simultaneously restricted “export access and raised the cost of critical imported inputs such as fertilizers, machinery, and seeds, compounding pressure on an already fragile sector.

“Canada’s continual alignment with U.S. foreign policy on China has yielded few tangible benefits while exposing the crop sector to significant economic fallout. With retaliatory Chinese tariffs on Canadian canola and related products, Canadian agriculture is now caught in the geopolitical crossfire between two global superpowers.”

The way out of this impasse requires a three-pronged strategy-pursuing diplomacy to negotiate de-escalation, striving to accelerate trade diversification to mitigate geopolitical risk and enhancing structural competitiveness in agriculture, the brief says.

Effective diplomacy requires coalition building across provincial governments, industry associations and U.S. stakeholders, using data-driven messaging that underscores mutual economic dependencies and food system resilience.

Achieving trade diversification is a complex and gradual process. “Efforts must go beyond signing agreements and include targeted export benchmarking, marketing support and reduction of non-tariff barriers to enable deeper market penetration in the Indo-Pacific, the European Union and the Middle East.”

Within Canada, a nation-building approach that includes removing interprovincial trade barriers and fast-tracking investment in ports, rail, and rural broadband infrastructure is essential.

“At the same time, modernizing the agriculture workforce through expanded agricultural technology training, improved succession planning, and targeted immigration pathways are key to supporting innovation and ensure future resilience in the sector.”

The agricultural sector is especially vulnerable because of its deep economic integration with the U.S. which has long been an asset but now exposes Canadian producers to abrupt policy shifts.

Meanwhile, China’s growing use of trade as a foreign policy retaliatory tool introduces additional volatility. As Canada seeks to maintain strong trade ties with both partners, its agri-food exporters face the challenge of navigating divergent and often conflicting geopolitical agendas of the two superpowers.

Falling commodity prices, rising input costs and high interest rates have squeezed the Canadian crop sector’s profit margins in recent years, creating significant pressure on growers.

To navigate these mounting pressures, the brief proposes a three-pronged approach:

-mitigating immediate risk of trade-related shocks through diplomacy and emergency domestic supports;

-diversifying export markets to reduce reliance on volatile trade partners;

-strengthening Canada’s competitive foundations through structural reform and investment.

The agri-food sector underpins national food security, supports rural economies and helps feed global populations, especially in regions dependent on reliable agricultural imports. Canada’s position as a leading exporter is becoming increasingly precarious as it is caught between U.S. and Chinese trade agendas. The U.S. is increasingly unpredictable in its use of tariffs and domestic-first policy. Meanwhile, China leverages agri-food trade as a diplomatic tool, imposing sudden barriers that disrupt billions in exports.

Canada must be swift and strategic in its responses.

This news report prepared for National Newswatch