How to Save Canadian Agriculture

I live in the Maritimes, or as many know it, potato region. Atlantic Canada grows a third of Canada’s potatoes—but they feed more than just Canadians. A whopping 93 per cent of the fresh potatoes we export go to one place: the United States. Until recently, exporting food to the American market was never an issue. The U.S.’s population is 10 times larger than ours, and we have vast swaths of arable land capable of producing far more food than we need to feed ourselves. This is part of what’s led the Canadian and American food supply chains to become increasingly interconnected over the years. But when President Donald Trump slapped 25 per cent tariffs on Canadian products last year, the free flow of products across our border was disrupted—and so was our agriculture.

While potatoes—and a slew of other food products—are protected from tariffs under CUSMA, many of the products needed to actually produce them are not. Tariffs caused the cost of machinery, fertilizer and processing to rise. There are also very real fears about changes coming to CUSMA after the U.S. passed on the opportunity to renew the agreement for a 16-year term at the beginning of July.

All this injects uncertainty into an industry that relies heavily on planning far into the future. In the Maritimes, where most farms are small or even family-run operations, this has been particularly rough. When the tariffs first hit in early 2025, more than half of Canadian farmers said they expected negative impacts. For those working with livestock, 88 per cent were concerned. This is bad news for more than just farmers. The agriculture sector contributes $150 billion to Canada’s GDP annually and provides one in nine jobs. If tariff-related costs keep eating into profits, we could be in real trouble.

This crisis is the result of the tariffs, but the fact they’ve been able to strike such a blow is the result of something else—an overreliance on the U.S. Our countries’ agriculture supply chains are extremely close knit. Sixty per cent of Canada’s agri-food exports are bought by America and half of our agri-food imports come from America. But there’s a reason we got to be this way. Our nations share a land border, and creating artificial barriers to trade makes little economic sense. We have similar diets, climates and needs—so why operate our industries separately? 

Though this integration has been developing for as long as our countries have existed, the relationship was formalized with the Canada-U.S. Free Trade Agreement in 1989, strengthened by NAFTA and continued with CUSMA in 2020. Over the past half-century, our food supply chains have come to operate essentially as one. Growing and processing happens where it’s most efficient, regardless of the country. This means many products cross the border just for packaging or labelling before being distributed back in the country where they were produced. Even livestock like cattle and hogs often make several trips across the border before winding up on store shelves. It’s this interconnectedness that makes trying to buy Canadian at the grocery store so complicated, but it also makes huge economic sense.

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Integration has been a boon for the agriculture sector on both sides of the border, but now it’s proving to be our weakness. The trade war exposed a vulnerability which already existed in the agriculture sector—one that I believe would have reared its head one way or another. The solution? We need to diversify. This isn’t as simple as finding a new America to trade with. There isn’t going to be a nation that has the same logistical benefits as the U.S. And besides, putting all our eggs (and beef, pork and canola) in one proverbial basket was how we wound up in this situation. 

The logical choice is to look to regions we already have agreements with, such as the Indo-Pacific, which we signed into a free trade agreement with in 2018. This free-trade area represents more than 15 per cent of global GDP. Mexico remains a friend through CUSMA and an important export partner for grains—there’s little reason not to ramp up trade with them. We could also use this as an opportunity to move into food-deficit countries in regions like the Middle East and North Africa. A smart diversification strategy is one centred on matching the right products to the right markets.

Diversification also holds the potential to bolster our agriculture sector, not just protect it. Even if we don’t increase our production of products, it’s entirely possible we could get a better deal on exporting them overseas than we do to the U.S. If we can demonstrate that Canadian agri-food products are a hot commodity, higher prices will follow.

The biggest barrier to diversification is our infrastructure. Integration with America has created a supply chain built for crossing a land border, not overseas trade. We’ll need to significantly expand our port capacity—as would any prospective trading partner. We’ll need more food-grade warehouses to store products before shipment and food terminals to send them on their way. We’ll also need more expertise to study foreign markets and gain the kind of intelligence that will make these ventures profitable.

There is one kind of trade we can increase without expanding our infrastructure, and that’s the trade that happens within our own borders. Interprovincial trade has become something of a buzzword since the trade war began, but in many sectors it has real potential—including agriculture. Barriers between the provinces come in the form of transportation restrictions, differing regulations and certification requirements. These may seem like small obstacles, but they certainly add up. According to a recent IMF estimate, these barriers add costs equivalent to a nine per cent tariff, and eliminating them could increase our GDP by nearly seven per cent. That comes out to around $210 billion in terms of long-term economic output. 

And while not all provinces have been getting along with one another lately, breaking down these largely unnecessary barriers in the face of a greater threat should be a no-brainer. Doing so would allow domestic producers to trade more within the country and rely less on American buyers. We can also expand our domestic processing capabilities. Keeping certain production stages like packaging, processing and livestock slaughter in Canada would mean cutting out some of those cross-border trips and increasing the sovereignty of these industries.

But it’s also true that we’ll never be able to abandon the U.S. market entirely. Fresh exports like meat, dairy and vegetables may travel well over the border but are difficult to ship globally. There are also few reasons to reduce our ties to the U.S. when integration, until recently, benefited us both. This is why trade negotiations will remain crucial, even alongside diversification. 

Canada isn’t the only one with a stake in this fight. Many American producers are hurting just as much as we are. There’s a reason I call this relationship interdependent. Between 1988—the year before the first free-trade agreement between our countries was signed—and 2024, agricultural exports from the U.S. to Canada grew 7.4 per cent. This is precisely the reason you won’t see the U.S. agriculture industry gunning for more tariffs. In fact, 40 organizations representing American farmers recently launched a lobby group called the Agricultural Coalition for USMCA, putting their weight behind free trade and arguing that barriers hurt American profits. The group even bought ads on Trump’s social media platform, Truth Social.

Diversifying our exports will take time, which we have little of right now. U.S. tariffs are already devastating the agriculture sector, and we likely won’t be able to diversify fast enough to mitigate those effects. But to an extent, that’s okay. Tariffs are showing us the hard way what happens when we rely too much on one partner. Diversification may not get us out of this trade war, but if we strive for it now, it could protect us from the next one.

Gumataw Abebe is an associate professor of agribusiness at Dalhousie University and a member of the Common Ground Network, a collective of scholars promoting sustainable agriculture.

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