U.S. trade improprieties will come with consequences

Canadian farmers understand how difficult it can be to build and maintain markets.

It can take many years to create trusting relationships with customers. When there are production or transportation problems that force customers elsewhere, there is no guarantee they will return once the disruption is over.

Demand destruction is a prolonged drop in consumer demand for a good caused by high prices or constrained supply. This forces consumers to seek substitutes or change behaviours, resulting in a long-term downward shift in demand.

U.S. president Donald Trump’s hostility toward his country’s trading partners is creating demand destruction for American goods.

Economies around the globe have rerouted trade flows in response to rising American tariffs and protectionist policies.

For instance, there has been a sea change in how NATO-aligned countries procure weapon systems because they no longer believe the United States is trustworthy.

Contracts for fighter jets and components for warships, for example, last for decades and are tallied in billions of dollars.

Trump’s antics have caused a long-term structural change in trade flows for the defence industry, to the benefit of non-U.S. defence contractors.

The agriculture and agri-food sectors in Canada and the U.S. are highly integrated, making Trump’s zero-sum negotiation strategy the wrong tool to fine tune this complicated relationship.

A briefing note obtained through an access to information and privacy request that was produced for federal agriculture minister Heath MacDonald ahead of a meeting last September with U.S. agriculture secretary Brooke Rollins makes the case that tariffs increase food prices and input costs for farmers in Canada and the U.S.

A goal for MacDonald was to position Canada as a key buyer of American agricultural products and underscore the benefits of the integrated supply chain to U.S. producers and processors.

The briefing note said Canada is the largest merchandise export market for 32 states and among the top three for 45 states in 2024.

For example, in 2024, Canada was the main export destination for many U.S. agricultural exports, including 95 per cent of fresh tomatoes, 90 per cent of live cattle, 90 per cent of fresh melons, 89 per cent of fresh turnips and carrots, 87 per cent of fresh headed broccoli, cauliflower, cabbages and kale, 76 per cent of pasta, 75 per cent of lettuce and 75 per cent of cereal food production, including breakfast cereal.

Canada’s first National Food Security Strategy, launched in June and backed by more than $3 billion in investments over 10 years, is designed to boost domestic food production across Canada.

The plan includes the investment of $750 million to drastically expand year-round Canadian production of fruits and vegetables, including through greenhouses, vertical farms and other enclosed growing spaces.

Canada is looking to make structural changes that could affect the long-term demand for U.S. agricultural products.

Consumers in Canada’s $25 billion alcoholic drinks market are getting used to non-U.S. products since the provinces, aside from Alberta and Saskatchewan, banned American booze in response to U.S. tariffs.

Last year, there was a 60 per cent decline in U.S. alcoholic drink exports to Canada.

The briefing note also describes how Canada is an indispensable trading partner when it comes to food security.

It provided a talking point for MacDonald that described that in 2024, the U.S. imported an estimated 172 products that were sourced solely from Canada and had a value of US$16.7 billion.

Not only is Canada a good market for the U.S., we’re also a reliable supplier that offers competitive pricing.

It’s unlikely MacDonald was able to convince Rollins of this, considering she is a supporter of Trump’s “America First” agenda.

The U.S. offers many food products and brands with which Canadians are familiar.

It took decades for these food manufacturers to build relationships with Canadian consumers, in some cases, and most of these companies like the rules and predictability of the Canada-U.S.-Mexico Agreement, which Trump wants to renegotiate.

It’s unlikely that the U.S. farmers that support Trump understand the long-term effect his policies will have on their markets.

Trump’s hostility and insolence toward trading partners will have consumers around the globe form new long-term relationships with products from countries they revere.

Karen Briere, Bruce Dyck, Robin Booker, Paul Yanko and Laura Rance collaborate in the writing of Western Producer editorials.