Director of the Agri-Food Analytics Lab, Sylvain Charlebois, speaks with Alberta Primetime host Michael Higgins about the potential impact U.S. tariffs could have on the food supply chain in Canada.
This interview has been edited for clarity and length.
Michael Higgins: How likely are tariffs to be applied to the food supply chain?
Sylvain Charlebois: I’ve been skeptical since Mr. Trump actually announced a potential 10-per-cent tariff back in November, just a couple of weeks after he was elected. I believed that he would probably spare the agri-food sector because the American consumer would likely see it right away at the grocery store, and if you really want to become an unpopular president quickly, you do that, you apply tariffs on Canadian goods.
We sell $44 billion of food products to the United States right now, which is a record, so obviously Americans would notice right away.
MH: How sustainable is this from a grocery standpoint? Is there the infrastructure, the food supply, to feed that demand?
SC: There is a bit of a shift, one can argue how much of a shift we’re actually seeing. Surveys are suggesting that the majority Canadians are actually looking at buying Canadian only, but the reality is that inflation has been an issue for a lot of people, and they’re looking at price and then the country of origin second.
We actually expect that 7-9 per cent of Canadians will absolutely boycott American products altogether at the grocery store for the next little while. I think the process is interesting. Whether the boycott works or not, it’s important to see that Canadians are looking at the country of origin. They’re trying to understand where their food is coming from, and that’s never a bad thing.
MH: How do you see the big grocery chains responding to this ‘Buy Canadian’ push? How much flexibility do they have to respond?
SC: Some of them have more flexibility than others. I do think that most grocers are taking advantage of this pro-Canadian atmosphere. You can’t deny this is going to be a good thing for the food industry in Canada. Grocers are the portal to that food industry, so promoting Canadian products as much as possible is desirable at this point.
MH: How much of a win might this end up being for the Canadian agri-food sector?
SC: If consumers make that extra effort to look further and see what else is out there, they’re going to find other companies elsewhere in Alberta and in Canada. That’s always a good thing if you as a consumer discover new products that you didn’t even know existed.
MH: There’s a lot of political and business sector focus on removing interprovincial trade barriers to get more goods flowing east and west, instead of reliance on the U.S. market. What degree of impact would that have on the food sector?
SC: Immense. I’ve been banging on that drum for 25 years, and to be honest, every time I sit down with a politician, and explain to them how we can make Canada a free-flowing market from coast to coast to coast, you have to tackle the big elephant in the room. That big elephant in the room is supply management.
There are several regions in Canada that have actually paid a dear price with supply management, in particular dairy. Dairy is 80 per cent of supply management with the quota system. Regions that have paid a dear price are the Atlantic, where I am, and the Prairies, where you are. I think that central Canada has become much more powerful as a result of that shift to the centre.
The quota system is run by provinces, not the federal government, and provinces are holding on to that power. If you harmonize quota allocation across the country, that is going to help, but until you do that, we do not have a free-flowing market. That’s the reality.
MH: When I go to the grocery store, I see a lot of fruit and vegetables that have a Mexico label of origin. How much room is there to grow that Canada-Mexico trade dynamic?
SC: I was just down in Mexico a couple of days ago. I was with farmers from Alberta, Saskatchewan and Manitoba, and we were looking at what was going on with the White House, Mexico, and Canada.
There’s lots of noise in the middle of our continent coming from America, and we tend to forget that we also have a formidable partner in Mexico. Mexico is also part of the USMCA, and I’ve always believed that by building this wonderful food corridor between Canada and Mexico, we can sell more food and buy more food from Mexico.
For example, there are three products they buy a lot from America: wheat, pork and corn. We produce those commodities very well, so why not sell more to Mexico and also buy food, because we can actually transport a lot of these foods tariff-free across North America, so we should take advantage of that.
MH: Would that still be the case if, in fact, the U.S. imposes tariffs? Might transportation through the U.S. become a problem?
SC: That’s the thing. I was very nervous when the executive order was released on Feb.1. The first thing I looked at was that practice, allowing products from Mexico to Canada to be shipped tariff-free, and it wasn’t compromised by the executive order.
But you never know with Mr. Trump. He could potentially put an end to that, but in the meantime, I see this as a tremendous opportunity.
MH: Long term, how do you see this tariff situation potentially changing our own consumer habits, especially where food purchases are concerned?
SC: I think we have to accept, as Canadians, that there’s a new normal. There’s a paradigm shift happening. We have a president that doesn’t believe in multilateralism at all. He wants to set a new global trade normal, essentially, and I think Mr. Trump basically believes that trades are a zero-sum game.
He’s made his fortune in media and real estate. Those are two sectors that don’t rely on trades. He wants to recapitalize the American market, and the way you do that is you weaponize tariffs again.
I don’t believe he will use tariffs. He hasn’t used them against Panama, Colombia, Mexico and Canada yet, but he will weaponize tariffs as much as possible to achieve his goal. We’re going to have to get used to that.
