Economist Warns U.S.-Canada Tariff Conflict Could Deepen Risks for Agriculture
An agricultural trade economist warned the bilateral tariff dispute may persist, leaving farm exporters, input buyers and consumers exposed to uncertainty.
University of Minnesota economist C. Ford Runge said the latest U.S.-Canada tariff conflict could become a protracted dispute with no clear winners, after negotiations that appeared close to an agreement on Aug. 21 broke down. His assessment, reported Sept. 12, is a forward-looking warning rather than evidence that the predicted agricultural or consumer effects have already occurred. [1]
The exposure is substantial for U.S. agriculture because Canada is the second-largest country destination for U.S. farm exports, according to Runge. He also pointed to Canadian supply of potash: Canada accounts for 80% of U.S. potash imports, creating a potential vulnerability for farmers and ranchers reliant on the fertilizer input. The report said that, as of Sept. 8, no additional tariffs had been imposed on potash. [1]
The dispute’s immediate tariff backdrop includes planned 50% duties on roughly US$21 billion of Canadian products and Canadian tariffs on C$27.6 billion of U.S. products beginning Sept. 8. Runge said the 50% tariffs would cover steel and aluminum, materials important to farm-equipment manufacturers, potentially extending the dispute’s exposure beyond traded crops and food products to agricultural machinery supply chains. [1]
Runge attributed the negotiating breakdown to late-stage demands by both sides and argued that disputes should be addressed incrementally rather than allowed to damage the wider trade framework. He said Canadian agricultural interests, particularly in the prairie provinces, are also concerned about retaining access to U.S. consumers, and characterized the consequences as more likely to create losses than gains for farmers on either side. [1]
The longer-term concern is commercial trust. Runge said the two economies have become more integrated since the NAFTA and USMCA eras, while reliable sourcing is particularly important in food trade. He warned that deteriorating confidence could take time to restore, leaving agricultural businesses to manage uncertainty even if the current tariff dispute is eventually resolved. [1]
This is a moderate-significance assessment rather than a newly measured market outcome: Runge identifies potential exposure for farm exports, fertilizer supply and equipment inputs if the dispute persists. The rating is not higher because the source reports a single expert’s outlook, potash had not received additional tariffs as of Sept. 8, and it does not document realized sector-wide damage. [1]