How Trump's threatened tariffs could impact Alberta's agriculture sector

Donald Trump has threatened to impose a 25 per cent tariff on all Canadian products entering the U.S. beginning Jan. 20, the day he is inaugurated.

And given that Canada's southern neighbour is one of Alberta's top export markets for key agricultural products like beef, the prospect of such punitive trade sanctions has left industry groups bracing for impact.

Economists say that while it's too soon to tell what the details of the new arrangement will bring, the proposed sanctions would undoubtedly re-arrange long-standing trade flow patterns and discourage U.S. buyers from buying Albertan products.

In 2023, Alberta exported nearly half of its food and agriculture products to the U.S., at a value of $8.79B. That figure includes 90 per cent of the province's bovine meat, valued at $2.9B, alongside 100 per cent of the province's live cattle exports.

On the crop side, 85 per cent of Alberta's canola was sent to the U.S. last year.

J.P. Gervais, chief economist with Farm Credit Canada (FCC), said Canadian and Albertan agriculture supply chains are highly integrated with those in the U.S., meaning that any kind of disruption at the border, in this case one that would spike prices of Canadian products, would have wide-ranging consequences.

For one, the tariffs would decrease the amount of Canadian products actually sold, said Gervais.

"We know that if you raise the price of a commodity through tariffs, buyers are going to buy less of it."

The tariffs would also touch all levels of the supply chain, said Gervais.

In the cattle industry for example, tariffs would be applied on both live cows being marketed to the U.S. by feedlots, as well as finished products supplied by meat-packing plants, which Gervais said would have ripple effects all the way down to ranchers themselves.

That could lead to a potential drop in beef prices for Canadian consumers, said Gervais, if more product floods the domestic market that can't be sold at a higher price at the border.

Overall though, Gervais said Trump's proposed sanctions would create instability for agriculture groups moving forward.

"[Agri-food supply chains] have been built on the basis of transparency and predictability.

"If you talk to businesses, what they don't like is the lack of predictability when it comes to what's going on in the markets because that makes it more difficult for them to make decisions, especially when it comes to investment over the long term."