Under the Agridome

Editor's Note: Today DTN is sharing content by that is normally reserved for paying customers. Not a subscriber? Check here for a trial: https://www.dtn.com/…

**

You cannot go anywhere in Canada these days and not see evidence of growing anti-Americanism. Of course, that is related to the ongoing attack on the economic front from the Trump administration. In fact, there is a popular hockey analogy that we get our "elbows up". I am not comfortable with any of it and much prefer the basketball analogy to "get back on defense."

It is a pretty rough time when the two biggest North American countries involving agricultural trade find themselves in a trade war. It's difficult to know what the Trump administration wants as it changes hourly, but from my perspective, we are here for the next at least four years. I'm not expecting it to get much better than it is now. Last week, on cue the Canadian government announced trade retaliation for the punitive American tariffs on Canadian goods.

Canada responded on March 4 with an initial $30 billion list which includes some agricultural commodities. For instance, there are several food products included, some cereal crops and canola oil. The lists are comprehensive and will also include another $125 billion worth of tariffs in about three weeks. Food, fertilizer, ethanol, corn, soybeans, as well as canola meal and forage seed. There will also be tariffs on lots of farm machinery such as tractors, combines, planters and other equipment. It will also include livestock. in other words, all of this is a big punch in the face to Canadian agriculture. It's also going to hinder American farmers.

The response from Canadian politicians has been aggressive, but not unexpected. What choices do we have? None of them are good. We have responded differently than Mexico, where President Claudia Sheinbaum has kept her powder dry. She will announce a response on Sunday. As I told you before, expect lower economic growth, higher unemployment, higher prices and less choice in the future. It's a new day and it's not very pleasant.

Some of you might have your elbows up, but keep in mind that I'm just simply running "back on defense". The economic barrage will surely be too much for us initially, but we must adjust our farms to come out on the other side someday. I expect that to be years, not months and not weeks.

Markets of all types do not like uncertainty, and we've got that in spades right at the moment. For those of you that saw the Zelensky/Trump Oval Office public disagreement, you know what I'm talking about. Where we are now is in a complete geopolitical reversal of what we have always known at least for the last 80 years. As Canadians it's pretty obvious that the trust we have with our neighbor to the South has been broken. Just like a lot of people in this world, we move ahead hoping for better things.

The uncertain sentiment that I referred to has manifested itself in our agricultural futures markets. We have had about an 85-cent drop in the price of corn since Feb. 19 as the talk of tariffs ramped up. Soybeans have fallen about $0.80 per bushel. As always, there are other reasons like good South American weather for these drops, but we all know there's more to it. Geopolitics has weighed in big time. China announced counter tariffs on American soybeans and corn this past week. So here we are, in quite a mess.

The combined tariff action by the United States and Canada is not good for anybody, but it will create basis opportunities, which will be nothing less than unusual. For instance, paying tariffs on American corn coming into Ontario is something that merchandisers aren't used to. With ample supplies in Ontario and Quebec at the moment, there will probably be no effect on basis. However, if Mother Nature is angry this summer and the Ontario corn crop is adversely affected, it will result in a lot lower supply available next fall. Generally speaking, that doesn't happen very often, but when it does, we import a lot of American corn to fill the supply gaps. Tariffs will make that a lot more expensive and increase Ontario basis values depending on where you live. Eastern Ontario might be able to name its cash price. Of course, now, it's all a theory. Needless to say, we are in a new world.

So, you can have your "elbows up" if you want. Keep in mind our American friends don't necessarily agree with all of this. The fentanyl thing and the border thing was just a ruse. It's time to get "back on defense." We've got farms to defend.

**
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

(c) Copyright 2025 DTN, LLC. All rights reserved.