Ontario Federation of Agriculture Commentary
By Drew Spoelstra, OFA Executive Member
In the complicated world that is the current state of affairs in international trade and tariffs, the agricultural industry needs strong advocates to protect all farmers’ interests. The Canadian Federation of Agriculture (CFA) is actively working with negotiators to ensure farmers in Ontario and across the country are not compromised.
As the North American Free Trade Agreement (NAFTA) negotiations drag on and tariff wars heat up, it’s critical that we look for opportunities and alternatives to mitigate the potential damage to our industry and our economy.
Canada and Mexico are the two largest export markets for U.S. products, and any serious change to the NAFTA deal or increased tariffs put our markets and competitiveness at risk.
U.S. President Trump insisted on a renegotiation of the 1994 trade agreement with Canada and Mexico early in his presidency. Talks are currently stalled and are expected to resume only after the Mexican national election on July 1.
On June 1, the U.S. imposed tariffs on imports of certain steel and aluminum products from Canada, Mexico and the European Union (EU) based on issues of U.S. national security. Canada is impacted the most by these tariffs. All three regions had been previously exempt from these same tariffs.
On July 1, Canada intends to impose counter tariffs on imports of steel, aluminum and other products (including some food products and whiskey) in response to the U.S. tariffs. This is standard procedure and permissible under international trade rules providing the value of the retaliatory tariffs are equal. Tariff targets are typically chosen for impact in terms of affected products and producers.
Generally, trade wars have the final effect of raising the cost of goods and services in the participating countries. Although some may benefit in the short-term from tariff-induced trade interruptions, overall it’s a lose-lose situation with producers and consumers financially impacted in both Canada and the U.S.
It gets even more complicated by the fact the U.S. is waging trade wars with other countries at the same time. For example, U.S. pork exports to Mexico will face retaliatory duties imposed by Mexico in response to U.S. steel and aluminum tariffs. Where will these displaced U.S. pork exports go? Consequently, our work must quickly look at the possible economic impacts on farmers in terms of markets and competitiveness and find ways and means to mitigate these impacts – to hold out until cooler heads prevail.
With CFA and our fellow farm organizations across the country, we will work to defend and protect the competitiveness of Canadian farms and our food industry as we await a rational outcome to economic madness.