Catastrophe.
That is the fallout feared by some Canadian shippers following U.S. President Donald Trump's threats last week of putting a 35 percent tariff on Canadian goods coming into the U.S. on August 1st, even though they won't apply to goods that are Canada-U.S.-Mexico Agreement (CUSMA) compliant. This is particularly so as U.S. tariff threats continue throughout the world, with the numbers and stipulations seemingly changing daily.
Some of the effects are simply related to the notion of tariffs alone. "The threat of tariffs on fresh produce creates uncertainty in our procurement planning. While we do not sell into the U.S., there are serious implications to our import business if Canada were to impose counter tariffs," said Hutch Morton of J.E. Russell Produce Ltd. "Furthermore, if a 35 percent tariff were imposed on fresh fruits and vegetables being sold to the U.S., there would be a devastating impact on the entire Canadian supply chain."
As he notes, for Canadian-grown greenhouse vegetables, where over 99 percent of the volume is exported, if that product were uncompetitive in the U.S. because of tariffs, the Canadian market could not absorb that surplus. "It would mean widespread financial devastation for growers, and that would impact many across the supply chain," says Morton.
Continued USMCA compliance
He says he continues to hope that all products and services that are covered by the current USMCA will be exempt from any tariffs. "The uncertainty of the business environment in a deeply integrated and highly perishable supply chain like fresh fruits and vegetables makes it more difficult to do strategic planning and investment," he says. "That's bad for our business, it's bad for the agricultural sector, and it's bad for our economy. That said, I remain optimistic and we will keep our heads down and just do the work in front of us."
© Van Meekeren Farms
Van Meekeren says despite tariff threats, the reality is that it will focus on finishing its apple crop in Nova Scotia and put its efforts in places where it has control.
In B.C., Discovery Organic's Stefan Misse says that Canadian growers who export their crops to the U.S. and have a market advantage due to the CAD/USD exchange rate would see that advantage disappear overnight if these new August 1 tariffs go ahead.
He too raises the issue of business planning. "I would be concerned for their business plans if their growing is based upon selling a majority of their exports into the U.S. market. The Canadian market might be able to absorb some of this volume, but likely not all of it," Misse says, adding that it could affect greenhouse growers and potentially also Canadian onion, potato, and carrot growers.
On the East Coast, Michael Van Meekeren of Van Meekeren Farms says he, too, would be very disappointed if a 35 percent Canada-wide tariff that did not honor USMCA were to be imposed. "In particular, our specialty varieties like Pazazz™ and the high-quality Honeycrisp would suffer," he says. "However, our reality is that we will focus on doing a great job finishing our crop in Nova Scotia and put all our efforts in places where we have control."
For more information:
Hutch Morton
J.E. Russell Produce Ltd.
https://www.jerussell.ca/
Stefan Misse
Discovery Organics
www.discoveryorganics.ca
Michael Van Meekeren
Van Meekeren Farms
https://givethemawink.com/