OP-ED: Why Trump’s tariff reversal is quietly great for Canada

"After months of insisting that tariffs had nothing to do with rising grocery prices, Trump abruptly reversed course this week, rolling back duties on more than 200 food-related products."

Source: Facebook

Author: Sylvain Charlebois

After months of insisting that tariffs had nothing to do with rising grocery prices, U.S. President Donald Trump abruptly reversed course this week, rolling back duties on more than 200 food-related products. The list is broad: beef, coffee, cocoa, spices, bananas, orange juice, tomatoes, tea, and even certain fertilizers. Officially, the move is being presented as a consequence of new “reciprocal trade agreements,” but the real motivation is more straightforward. American consumers have been feeling the pain of high food prices, and the White House could no longer ignore the political consequences.

What’s remarkable is how much this decision benefits Canada. For starters, Canadian beef producers stand to gain immediately. The United States remains our largest export destination for cattle and beef products, and with U.S. tariffs now reduced or removed, Canadian beef becomes more competitive almost overnight. Feedlots in Alberta and Saskatchewan, major packing plants in High River and Guelph, and cow-calf operations across the Prairies should feel the effects in both demand and pricing.

Canadians in the importing and processing sectors will also benefit. Many do not realize just how deeply our supply chain relies on U.S. ports and wholesalers for essential ingredients such as coffee beans, cocoa, tropical fruits, juice concentrates, and spices. When the United States lowers tariffs on these products, wholesale prices drop — and Canadian companies that source through U.S. distribution hubs instantly face lower input costs. Roasters, chocolatiers, bakeries, beverage processors, food manufacturers, and restaurant chains all stand to enjoy some relief in their margins.

Consumers may not see immediate price reductions at the checkout counter, but the direction of travel matters. Lower input costs in the United States often spill over into Canadian wholesale markets, reducing pressure on our grocers and food-service operators. At a time when affordability remains the number-one concern for Canadian households, any easing of cost pressure is significant.

Here’s the context: In the U.S. the 12-month food price inflation rate recently stood at about 3.1% for all food categories. For “food at home” (grocery store food purchases) the rise was approximately 2.7%. In contrast, in Canada, food-price inflation recently was reported at around 3.8% compared to a year earlier. These rates indicate that even though food inflation has moderated somewhat, it remains well above the target inflation rate of many central banks and remains a significant burden for households.

Grocery chains operating in Canada will also quietly benefit. Loblaw, Sobeys, Metro, and Costco Canada source a substantial portion of their products either directly from U.S. suppliers or through North American procurement systems. Lower U.S. tariffs on key food commodities translate directly into more favourable sourcing conditions for these retailers. Whether this helps moderate retail pricing is a legitimate question, but it is impossible to ignore the structural cost savings that come with policy changes like this.

Of course, not every Canadian sector comes out ahead. Canadian produce growers could face competitive pressure if U.S. retail prices fall for imported fruits. Some Canadian processors competing with American firms may also find themselves at a disadvantage as U.S. manufacturing becomes cheaper. But these challenges are relatively contained compared to the broader benefits that will flow through the Canadian agri-food economy.

What Trump has done, perhaps unintentionally, is provide a rare piece of good news during a year dominated by food inflation, supply-chain turbulence, and rising insecurity at home and abroad. The North American food system is deeply integrated. When the United States lowers a major cost barrier, Canada benefits almost automatically. For once, a politically-charged decision in Washington may actually help alleviate some pressure in Canadian households.

Canada didn’t lobby for this tariff reversal, and we certainly weren’t in the room when the decision was made. But we will reap the rewards — and given the economic climate, we should take them.

— Sylvain Charlebois is director of the Agri-Food Analytics Lab at Dalhousie University, co-host of The Food Professor Podcast and visiting scholar at McGill University.