Sylvain Charlebois - Feb 11, 2025 / 11:00 am | Story: 532062
Photo: AP Photo/Alex Brandon
U.S.President Donald Trump
The threat of tariffs on Canadian and Mexican exports to the United States has been temporarily delayed, but the reprieve is just that—temporary.
The tariffs are not just another round of trade skirmishes, they signal a deeper shift that could mark the beginning of the end for Bretton Woods-era multilateralism—the rules-based global trade order that has shaped international commerce since 1944.
Now that U.S. President Donald Trump is back in the White House, his administration is escalating its push for economic nationalism, using tariffs and trade barriers as leverage to reshape global commerce on U.S. terms.
The 30-day delay is not a retreat—it’s a tactical pause before the next round of pressure. And when that pressure comes, Canada will feel the full weight of it. The looming tariffs on Canadian and Mexican products, including agri-food exports, could dismantle what remains of the comprehensive Canada-United States-Mexico Agreement.
Trump sees trade as a zero-sum game, believing the U.S. has been taken advantage of for decades. The imposition of tariffs is not about fixing a broken system—it’s about reshaping the global trade order to bolster American industries, gain negotiating leverage, and appeal to his political base. Even if Canada retaliates with 500 per cent tariffs, it would be irrelevant to Trump’s calculus. The objective is power—exercising it, consolidating it, and using it to rewrite trade relationships on U.S. terms.
Since the signing of CUSMA in 2020, Canada has operated under the assumption that trade relations with the U.S. would remain stable. But with tariffs once again weaponized as a policy tool, the reality is clear: The era of predictable North American trade is over. Trump’s strategy is to return to bilateral agreements, where the U.S. pressures individual nations instead of negotiating within multilateral frameworks.
In this scenario, Canada’s bargaining power is drastically weakened. The U.S. remains the primary market for Canadian agricultural exports, with nearly 60 per cent of total agri-food shipments destined for American consumers.
A tariff war would devastate Canadian producers, forcing them to either absorb higher costs, pass them on to consumers, or search for alternative markets—none of which are ideal. For Canadian farmers and food processors, the impact is immediate and brutal.
Tariffs on dairy, beef, pork, grains, and processed foods erode their competitiveness in the U.S. market, reducing profit margins for an industry already struggling with high inflation, labour shortages, and supply chain disruptions. The agri-food sector, which once thrived under integrated North American supply chains, now faces the prospect of long-term instability.
Alternative markets in Europe and Asia may offer some opportunities, but they come with logistical barriers, regulatory hurdles, and lower profit margins. The notion that Canada could simply pivot away from the U.S. market is a fantasy—economic and geographic realities dictate otherwise.
Meanwhile, Mexico is also hit by Trump’s tariffs, but unlike Canada, it has deeper trade ties with China and may pivot towards expanding partnerships in Asia and Latin America. This could further fracture North America’s economic integration, leaving Canada isolated in a shifting trade landscape.
The most concerning aspect of this shift is how ill-prepared Canadian policymakers appear to be. There is little evidence that Ottawa grasps the scale of the transformation underway. Instead of proactively countering tariffs with smart trade diplomacy, Canadian leaders remain fixated on multilateralism—a system Trump is dismantling piece by piece. Retaliatory tariffs, though politically necessary, are a blunt instrument. They will not dissuade Washington from its broader goal: restructuring trade agreements to serve U.S. interests first.
As tariffs become the norm rather than the exception, CUSMA itself could become obsolete.
Trump has never viewed NAFTA—or its replacement, CUSMA—as a good deal for the U.S. His administration is likely to push for new, one-on-one agreements where America’s economic power is used to extract maximum concessions from Canada and Mexico.
The era of structured dispute resolution and predictable trade policies may be over. While external trade threats loom, Canada also faces self-inflicted economic weaknesses. Interprovincial trade barriers remain a major obstacle, limiting economic flexibility just when Canada needs it most.
While Ottawa scrambles to react to U.S. tariffs, businesses still struggle to move goods freely within Canada due to outdated, protectionist regulations. If Canada wants to offset the impact of external trade shocks, it must first eliminate these internal inefficiencies. A unified domestic market is the foundation for stronger international trade partnerships.
The agri-food sector must prepare for a future of permanent trade uncertainty. Canadian producers will need to invest in diversification strategies, even if expanding into non-traditional markets is costly. Meanwhile, policymakers must shift from damage control to proactive trade strategy. Simply reacting to U.S. tariffs isn’t enough—Canada must forge stronger trade alliances beyond North America.
Trump’s tariffs are not just a policy shift—they represent a fundamental restructuring of global trade dynamics. Canada must adapt or risk being left behind.
As Trump rewrites the rules of global trade, Canada cannot afford to react passively. Failing to adjust now will leave the economy permanently vulnerable—and unable to compete in a world where America dictates the rules.
Sylvain Charlebois is the senior director of the Agri-Food Analytics Lab at Dalhousie University and co-host of The Food Professor Podcast.
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.
Dan Paszkowski - Feb 7, 2025 / 11:00 am | Story: 532045
Photo: Castanet
Canada’s economy faces mounting pressures from external trade uncertainties.
The ongoing threat of U.S. tariffs highlights just how vulnerable our over-reliance on foreign markets—especially the United States—has made us. In an increasingly unpredictable global trade environment, Canada needs to focus on reducing barriers within its own domestic market, starting with internal trade restrictions that stifle growth and innovation.
One of the clearest examples of this issue lies in the wine industry, Canada’s highest value-added agricultural product. Despite its potential, Canada’s wine market remains fragmented by provincial trade barriers, hindering the growth of wineries, limiting consumer access to a wider variety of local wines, and preventing Canada from fully realizing the economic benefits of a robust, thriving wine sector.
The provinces of Alberta and British Columbia took an important step forward in late 2024 by launching a direct-to-consumer model for wine.
That groundbreaking agreement allows B.C. wineries to legally sell and ship wine directly to consumers in Alberta. Based on reciprocity, the model enables Alberta to do the same with B.C. consumers, setting a promising precedent for other provinces such as Ontario, Nova Scotia, and Quebec.
That shift signals a potential change in how internal trade barriers can be dismantled to benefit both businesses and consumers.
However, why stop there? Canada’s wine industry, with more than 600 wineries and a broad variety of brands, has the capacity to become an even more powerful economic driver. Yet, it remains hampered by interprovincial trade regulations that limit access to wines from other provinces.
Last week, Wine Growers Canada wrote to Canada’s premiers, calling on them to immediately tackle these archaic laws, so their residents can enjoy world class wines shipped directly to their homes from an out-of-province Canadian winery.
Removing these barriers would open new revenue streams, create jobs, and foster innovation in wineries, logistics, and retail sectors. The potential is vast, and by expanding the DTC model across Canada, we could see a more competitive, open domestic market for wine and beyond.
The argument for breaking down trade barriers is not confined to the wine industry. It’s about strengthening the entire Canadian economy by fostering greater self-sufficiency. As Canada faces the challenges of a volatile global economy, expanding internal markets and removing trade restrictions will build a more resilient domestic economy—one less reliant on external markets and more capable of withstanding global disruptions. In fact, according to a study by the International Monetary Fund, removing internal trade barriers could increase Canada’s GDP per capita by up to 4%, or about $2,900 per person (in 2023 dollars).
Canada has long been an advocate of free trade on the international stage. With agreements like CUSMA, CETA, and CPTPP, 92% of all imported wines enter Canada without tariffs. It is puzzling, then, that our own internal trade barriers persist, raising prices for consumers and reducing productivity across provinces. Those barriers hold back innovation and prevent local businesses from accessing larger markets, making it harder for Canadian producers to compete globally.
Wine is the perfect industry to begin breaking down those barriers. By fostering a freer, more competitive domestic wine market, Canada cannot only strengthen the industry itself but also create a blueprint for removing internal trade restrictions across other sectors. Allowing Canadian wine producers to sell and ship directly across provinces would lead to increased tax revenues for provincial governments, greater consumer choice, and a more dynamic economy.
If there was ever a time for Canada to prioritize domestic growth, it is now. The Alberta-BC wine agreement is a promising first step, but other provinces—especially Ontario, Quebec, and Nova Scotia—must follow suit. Breaking down these internal trade barriers will make Canada’s economy stronger, more resilient, and better positioned to thrive in a global market that is anything but certain.
It’s time to unlock the potential of our own economy and enter the 21st century. Let wine be the catalyst for a more connected, self-sustaining, and prosperous Canada.
Dan Paszkowski is the president and CEO of Wine Growers Canada, an organization with member wineries of all sizes that are responsible for more than 90% of all wine produced in Canada
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.
Sylvain Charlebois - Jan 28, 2025 / 11:00 am | Story: 529960
Photo: Castanet
U.S. President Donald Trump’s provocative suggestion that Canada might as well be America’s 51st state is absurd, as Canadians know.
But it is precisely this absurdity that garners attention — something Trump understands all too well. To Canadians, such comments are exasperating, but they also highlight a deeper issue: the dysfunction within Canada’s own economic framework, particularly when it comes to interprovincial trade.
Most Canadians understand this will never happen. However, Trump’s comments strike a nerve because they expose an inconvenient truth: Canada’s fragmented trade policies often make it easier to do business with the United States than with other provinces.
Interprovincial trade barriers have been a longstanding issue, and provinces frequently prioritize the U.S. market, drawn by its ease of access and substantial economic returns.
Alberta Premier Danielle Smith has repeatedly voiced frustrations with Canada’s disjointed energy policies.
Eastern Canada’s lack of willingness to discuss cross-country pipelines has left Alberta relying heavily on exports to the U.S. for its energy resources. The agri-food sector faces similar challenges. Provinces like Ontario and Quebec, for example, often prefer to maintain tight controls rather than foster seamless trade relationships with the rest of Canada.
When trade disputes arise with the U.S., these provinces have historically been quick to sacrifice others — most notably Alberta — even though Alberta’s equalization payments financially support many of the social programs delivered in Eastern Canada.
This hypocrisy extends beyond energy and into food systems. While Alberta and British Columbia recently reached an agreement to ease interprovincial wine trade, Ontario and Quebec continue to resist efforts to smooth alcohol trade.
This resistance mirrors the broader challenges of supply management, which governs the production and pricing of dairy, poultry, and eggs. Each province operates under its own quotas, making the movement of these goods across provincial borders unnecessarily complex. For instance, a dairy farmer in Quebec faces significant regulatory hurdles if they want to sell milk to processors in Ontario.
These inefficiencies directly impact Canadians. Chicken in British Columbia, for example, costs 25%-30% more than in other parts of the country, despite supply management’s supposed mandate to provide safe and affordable food to all Canadians. The situation is even worse in northern communities, where the cost of food skyrockets due to logistical barriers.
Moreover, inconsistent provincial regulations on food labeling, packaging, and grading further complicate interprovincial trade. A fruit producer in British Columbia, for instance, may need to adjust packaging to meet Ontario’s specific requirements, driving up costs and reducing competitiveness.
Similarly, differing rules around transportation create roadblocks for perishable goods. Manitoba beef producers looking to sell in Quebec face delays from varying inspection protocols or transportation permits.
Small businesses and farmers also bear the brunt of these barriers. A butcher in Alberta, for example, operating in a provincially inspected facility, cannot sell beef to retailers or restaurants in neighbouring Saskatchewan, even if demand exists. Likewise, variations in pesticide, fertilizer, or farm equipment regulations across provinces create logistical headaches for farmers, particularly those near provincial borders.
Even local food initiatives, designed to support regional producers, inadvertently hurt interprovincial trade. Schools in Ontario and Quebec that prioritize purchasing locally grown apples make it harder for British Columbia growers to compete.
The examples are endless, and the consequences are clear.
Canada’s fragmented trade policies undermine its competitiveness, leaving provinces overly reliant on the United States for economic growth. Addressing these barriers is not only essential for fostering a stronger national economy, but also for reducing vulnerabilities in times of geopolitical uncertainty.
Trump may be wrong most of the time, but his comments sting because they point to Canada’s potential to do better. If Canada wants to become a more competitive marketplace and lessen its reliance on the U.S., it’s time for provinces to cooperate and tear down the walls that divide us.
Sylvain Charlebois is the Director of the Agri-Food Analytics Lab at Dalhousie University and co-host of The Food Professor Podcast.
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.
Sylvain Charlebois - Jan 24, 2025 / 11:00 am | Story: 529367
Photo: Pixbay
The latest food inflation data, released this week, was nothing short of startling.
From November to December, Canada’s food inflation rate plummeted from 2.8% to 0.6% — an unprecedented monthly decline. This marks a historical record, surpassing the previous drop of 1.9% in March 2012.
What makes December’s numbers even more surprising is that the food industry typically sees inflationary pressures peak during the winter months, especially in November, December, February, and March. For the busiest month of the year, a decline of -2.2% is highly unusual and largely attributed to the GST holiday, which began on Dec 14.
The GST holiday has, without question, delivered relief for consumers. However, it also highlights the complex relationship between tax policy and inflation metrics.
According to Statistics Canada, the Consumer Price Index (CPI) reflects the final prices paid by consumers, including GST, PST, or HST, as well as environmental, liquor, and tobacco taxes where applicable. When taxes like GST are reduced, it directly impacts the CPI. This is exactly what we saw in December, and similar trends are expected in January and February.
The data from Statistics Canada reveals a strong correlation between lower food inflation rates at restaurants and the extent of tax relief provided during the GST holiday.
Provinces offering the most significant reductions, such as Nova Scotia, Newfoundland and Labrador, and Prince Edward Island—where GST was cut by 15%—experienced the steepest declines in restaurant inflation at -3.9%, -4.0%, and -3.0%, respectively. Ontario, with a tax reduction of 13%, also saw a notable drop at -3.0%. These numbers are remarkable.
In contrast, provinces like Alberta, Saskatchewan, and Manitoba, where GST was only reduced by 5%, experienced negligible impacts.
Alberta’s restaurant inflation decline was a mere -0.2%. This disparity underscores the direct influence of tax reductions on inflation data. However, it also exposes how these policies can artificially suppress inflation metrics, masking underlying cost dynamics. Base menu prices likely remained unchanged or subtly increased, even as tax-inclusive prices dropped. This “tax illusion” gives the impression of reduced costs without reflecting the actual market conditions.
Statistics Canada’s report is clear: Canadians paid less for food in December.
Month-over-month inflation rates fell by -0.3% in retail and -4.5% in restaurants. But this does not mean food became genuinely cheaper. Quite the opposite. The GST holiday’s impact has created a temporary distortion, masking the true cost trajectory of food and leaving room for “opportunity pricing.”
Some grocers and restaurant operators may have leveraged the tax break to increase their base prices, confident that consumers would focus on lower final bills rather than subtle price hikes. This phenomenon highlights a key concern with temporary fiscal measures: they can obscure real price dynamics and inadvertently encourage strategic pricing adjustments that offset intended benefits.
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What December’s data truly reflects is not a straightforward pass-through of tax relief but a complex interplay between reduced taxes and business pricing strategies.
This serves as a cautionary tale about the unintended consequences of short-term fiscal policies.
While the GST holiday may have offered consumers some relief, it also underscores the risks of relying on temporary measures to address long-term affordability challenges in the food sector. Real solutions require structural, sustainable approaches that address both inflationary pressures and market dynamics comprehensively.
Looking ahead, consumers should brace themselves for major price hikes in the spring and beyond, as predicted in our annual Canada’s Food Price Report 2025. These increases are expected to reflect ongoing inflationary pressures, supply chain challenges, and market adjustments following the expiration of temporary measures like the GST holiday.
Sylvain Charlebois is the director of the Agri-Food Analytics Lab at Dalhousie University and co-host of The Food Professor Podcast.
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.
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