Under the Agridome

I'm into the deep freeze here in southwestern Ontario. At least that's the way it feels with temperatures going down to minus 16 degrees Celsius (3.2 degrees Fahrenheit) during the last two days. When it gets that cold, I've often wondered whimsically if the Canadian economy can operate under such chill. Over a period of a career, I have found that is operated just fine. It may be counterintuitive, but Canadian winters don't necessarily slow Canadian economic activity.

At the moment though, you would think that there is somewhat of an apocalypse coming for our land. You cannot operate in Canada these days without hearing the threats coming from the south with possible 25% tariffs coming Feb. 1. The news media and many of our politicians are cranking up the vitriol from the South. I will be speaking more on this subject next week as I will be addressing the Durham Region Agricultural Leadership Program coming up Jan. 28.

In many ways it is an emotional time for Canadians as we are being chastised by U.S. President Donald Trump unfairly. Keep in mind that all through our history Canadian prime ministers have looked down nervously at the actions of our very rich and rambunctious neighbor to the South. We have been invaded at least twice and sent them packing on both occasions. However, it is never a fair fight, and this time around is no different. If President Trump says that he's going to enact those tariffs, I tend to believe him. The American government is already lining up to give their farmers compensation for any injury in a trade war.

It seems so counterproductive, just like the last time when China slapped on its own tariffs on American soybeans going into Asia. We all remember the soybean market falling out of bed. The American government responded by subsidizing American farmers. In essence, they were subsidizing American farmers from their own trade action. However, here we are in 2025 and the same thing is happening.

Keep in mind what an American tariff is. A 25% tariff is a charge of 25% on the value of Canadian goods going into the U.S. paid for by the American importer. If it is paid for, it would be passed on to American consumers. There is an obvious contradiction there. For instance, why would any American importer want to do that? Simply put, they don't, and they will do anything to resist importing those Canadian goods at 25%. At the end of the day there will be a sharp reduction in demand for Canadian goods which will back up right into the bank accounts of Canadians. That's why it's so tough for us.

In the case of Canadian and U.S. trade, it is unlikely to end well for either side. However, because we are the smaller country, we have the most to lose. Nevertheless, we cannot sit down and just take it. I am sure the Canadian government will respond to tariffs with a dollar-for-dollar tariff back on American goods. Hopefully, somebody important will notice. However, in the current political environment all of it is just no good. At the end of the day, it's going to hurt, but as Canadians will have to find a way to get through it.

I do not like the political directives from the United States, and I do not like the political reactions from several Canadian politicians. In fact, I do prefer the reaction of the Mexican President Claudia Sheinbaum who stood her ground and kept her powder dry. I would much prefer that here. However, maybe Americans and Canadians are so culturally similar that there is an emotional reaction of unbelief from the Canadian side. You mean, we are the villains? Nobody wants to believe that here, and in fact it is incredible in the least.

Agricultural trade between the United States and Canada is the largest in the world. For instance, the U.S. imports more than 90% of their potash and 87% of that comes from Canada. The U.S. imported $40.4 billion of agricultural commodities from Canada in 2023 and $37.7 billion through November of 2024. At $1.74 billion, Canada is the largest buyer of U.S. ethanol.

These figures from DTN Ag Policy Editor Chris Clayton's Jan. 13 blog called Trump, Tariffs and USMCA, which you can see at https://www.dtnpf.com/….

The list is almost endless, a tremendous trading relationship rivaled by no one around the world.

In my mind I see no answer to this. There is no way that Canada can placate President Trump when his mind is made up. We simply have to go into this with retaliation top drawer. At the end of the day, we just have to take what's coming. It might get rough, but Canada will survive and so will Canadian farmers.

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The views expressed are those of the individual author and not necessarily those of DTN, its management or employees.

Philip Shaw can be reached at philip@philipshaw.ca

Follow him on social platform X @Agridome

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