Canada is vowing to battle again in opposition to U.S. President Donald Trump’s sweeping tariffs that went into impact Tuesday, and potash may change into a potent weapon within the rising commerce warfare — however economists are urging warning.
Potash is a key ingredient in fertilizer, and roughly 85 per cent of the availability utilized by American farmers comes from Canada — significantly Saskatchewan, the place potash is a serious export market.
U.S. farming teams and even some Republicans aligned with Trump have referred to as for potash to be exempted from the blanket tariffs out of concern for the agricultural trade.
Ontario Premier Doug Ford informed reporters Tuesday that Saskatchewan Premier Scott Moe ought to contemplate now not promoting potash, uranium and oil to the US and as an alternative discover totally different markets.
“We’d like to ensure America feels the ache,” Ford mentioned. “With out potash down there, (the U.S.) doesn’t have a farming system.”
Prime Minister Justin Trudeau, whereas asserting a primary spherical of retaliatory tariffs on U.S. merchandise, mentioned Canada would additionally take a look at non-tariff measures if crucial however didn’t reply straight when requested whether or not Ottawa may curb exports of potash or crude oil.
Moe has beforehand pushed again on the concept of limiting Canadian materials exports to the U.S., and that Canada’s countermeasures mustn’t disproportionately harm anyone province.
He mentioned in an announcement Tuesday that his cupboard would meet Wednesday to “contemplate all choices” to answer the U.S. tariffs, and reiterated requires lowered interprovincial commerce obstacles and the promotion of pipelines and different infrastructure.
“American farmers want Canadian gas and fertilizer to develop their crops,” Moe mentioned. “Trump’s tariffs will drive up the price of oil, potash and uranium and that may drive up the price of groceries for each American household.”
Even with a decline in potash costs in 2023, Saskatchewan exported over $11.5 billion price of potash that yr. Practically all of it goes to different nations, representing a full third of worldwide manufacturing. The following largest producers, Russia and Belarus, make up one other third mixed, adopted distantly by China.
The Canadian fertilizer trade mentioned U.S. tariffs not simply threaten meals manufacturing and safety on either side of the border, however can even push American farmers towards these nations.
“Imposing U.S. tariffs on Canadian fertilizer imports will distort the U.S. market in favour of nations resembling Russia and China, who don’t function below the identical environmental, human rights and commerce practices, undermining the crucial commerce objectives of every of our nations,” an announcement from Fertilizer Canada mentioned.
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However Corey Rosenbusch, president and CEO of the Fertilizer Institute in Denver, Colo., mentioned these nations received’t fill the hole left if the American agricultural trade strikes away from Canadian potash.
“There wouldn’t be (sufficient) provide globally to fully change that,” he mentioned in an interview. “Even with tariffs we nonetheless will want Canadian potash.”
Nutrien, one of many largest potash producers in Saskatchewan, has warned the price of tariffs would in the end be felt by U.S. farmers. The corporate informed World Information it has been partaking with policymakers and stakeholders within the U.S. and Canada to make the case in opposition to tariffs.
Different firms that mine potash in Saskatchewan — a lot of that are foreign-owned — declined requests for an interview or remark Tuesday.
Rosenbusch mentioned farmers have been capable of import sufficient potash and different fertilizer merchandise throughout February, when tariffs have been quickly paused, to arrange for the spring planting season that’s already underway in some states.
However he mentioned importers noticed value will increase because of the uncertainty, and a few needed to flip to Russian potash because of the excessive demand.
He added 60 per cent of potash used yearly within the U.S. is utilized within the fall, which means farmers will quickly really feel the impression of tariffs within the coming months.
Farming trade teams like the American Farm Bureau Federation say farmers have suffered losses on most main crops for 3 straight years amid excessive international inflation and provide chain constraints, with tariffs additional including to these woes.
“This isn’t a good time for them to see elevated enter prices,” Rosenbusch mentioned.
In February, after Trump first introduced the tariffs on Canada and Mexico however earlier than he quickly halted them, Republican Sen. Chuck Grassley of Iowa — a serious agricultural state — mentioned he was pushing for potash to be exempted from the extra levies, one thing additionally pushed by fertilizer and farming teams.
Requested Tuesday if he was nonetheless in search of a potash exemption, a spokesperson for the senator pointed to a remark Grassley made to reporters the place he mentioned he was taking a wait-and-see strategy to Trump’s tariff coverage.
“I’m nonetheless a free and truthful dealer,” he mentioned. “The president received the election primarily based upon the very fact he was going to impose tariffs, and possibly it is going to work (to scale back or eradicate international tariffs).
“If he’s profitable I’ll say ‘amen,’ and if he’s not profitable I’ll say ‘I informed you so.’”
U.S. Agriculture Secretary Brooke Rollins informed reporters Sunday that she had raised the problem of elevated potash import prices with Trump and different administration officers “and can proceed to.”
Ought to U.S. exports be lower off?
Economists say reducing off potash exports to the U.S. could be unnecessarily escalatory and threaten meals provide in each nations.
“I see considerably extra danger for unfavourable repercussions, but additionally by way of public notion in the US, in addition to kind of not directly right here in Canada, that will make me hesitate fascinated by utilizing potash,” mentioned Werner Antweiler, a professor and worldwide commerce coverage analysis chair on the College of British Columbia.
“We don’t wish to create a scenario the place the Individuals hate us. … You wish to have Individuals form of rally round us and make our case.”
Even curbing oil and fuel exports, which Moe and Alberta Premier Danielle Smith have strongly resisted, could be a much less excessive transfer than reducing off potash, Antweiler mentioned.
Canada imported $32 billion in agricultural merchandise from the U.S. in 2023, and plenty of of these objects are actually topic to Canadian counter-tariffs.
Carol McAusland, a professor of land and meals methods on the College of British Columbia, mentioned a greater tactic could be to place an export tax on potash offered to the U.S. That will additional increase costs for American farmers however guarantee Canada collects a few of that cash, she mentioned.
“What we wish to do is allow them to know that we’re not simply going to simply accept this,” she mentioned.
She agreed that an export ban could be “form of like going to the nuclear possibility.”
She added shoppers could not see the impression of upper costs associated to potash for a while, because the import value will increase work their approach into the meals provide chain. That can make it necessary for each Canadian and American stakeholders to clarify why shoppers are paying extra.
Rising home unrest could persuade Trump to elevate the tariffs or no less than exempt agricultural merchandise, UBC professor and international coverage analysis chair Kristen Hopewell mentioned.
“There is no such thing as a query that Trump’s commerce wars will severely harm American farmers, considered one of his key constituencies,” she mentioned in an electronic mail.
“American farmers are going to be squeezed on either side. Their rising anger will put appreciable stress on Trump to take away his tariffs.”
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