Trade uncertainty shaping investment decisions, industry leaders say

Uncertainty surrounding Canada-U.S. trade relations is influencing planning and investment decisions across the agriculture sector, speakers said during a recent webinar hosted by RealAgriculture and the Canadian Agri-Food Policy Institute (CAPI).

While tariffs remain a concern for producers and agribusinesses, panelists said unpredictability surrounding future trade policy is also making it more difficult for businesses to plan and invest.

Lisa Raitt, a former federal cabinet minister who now works with CIBC and serves on a federal advisory council, said many companies are waiting for greater certainty before moving ahead with long-term plans.

“What really concerns business is uncertainty,” Raitt said. “They’re holding back on making decisions on investment. They’re holding back on business plans. They’re holding back on development.”

She said prolonged uncertainty can weigh on economic confidence and make long-term planning more difficult.

Focus remains on costs

Audience members participating in a webinar poll identified rising equipment and input costs as one of their leading concerns.

RealAgriculture founder Shaun Haney said producers are closely watching any policy changes that could add to expenses.

“Tariffs are a tax on the person paying,” Haney said.

Craig Johnston, chief economist with Farm Credit Canada (FCC), said trade-related uncertainty is being considered alongside investment decisions throughout the food and agriculture sector.

According to Johnston, Canada has opportunities to expand its agri-food sector in response to growing global demand, but additional capital investment will be needed to support that growth.

“We’re in a real inflection point in the ag and food sector,” he said. “There’s a strong opportunity in front of Canada to capitalize on growing food demand and increasing appetite for diversification globally, but it’s going to require investment.”

Johnston said uncertainty in the trade environment can make businesses more hesitant when evaluating future projects.

Export tax proposals discussed

Speakers also discussed proposals that have surfaced in response to U.S. trade actions, including the possibility of export taxes on products such as potash and energy.

Raitt questioned whether such measures would benefit Canada, citing the industry’s reliance on transportation networks and infrastructure located in or connected to the United States.

“You start slapping export duties on it, you’re hurting yourself first and foremost,” she said.

Potash has been part of the conversation because Saskatchewan supplies a significant share of the fertilizer used by U.S. growers.

The idea of export taxes has also faced opposition from Saskatchewan Premier Scott Moe and Alberta Premier Danielle Smith.

Cross-border agriculture remains closely connected

Several panelists highlighted the long-standing integration of Canada and U.S. agricultural supply chains.

Joseph Glauber, former chief economist with the United States Department of Agriculture (USDA), said Canada continues to be a key market for U.S. agricultural products, including ingredients and processed goods that move between the two countries.

“Canada is a huge partner of the U.S.,” Glauber said. “These are intermediate products that are coming in and consumer-ready products that are coming in.”

Johnston said decades of free trade have shaped business relationships and supply chains on both sides of the border.

“The integrated supply chains and the ability to move primary products and value-added products back and forth across the border is beneficial to both economies,” he said.

Diversification efforts continue

The discussion also touched on Canada’s efforts to expand trade beyond the U.S. market.

Johnston said FCC estimates that billions of dollars worth of Canadian agri-food exports are subject to the latest round of tariffs, with alcoholic beverages among the categories facing the greatest exposure.

At the same time, he said opportunities exist in other markets where Canada already has trade agreements and established trading relationships.

“We shouldn’t abandon and ignore” the importance of the U.S. market, he said, “but it’s really important we pursue efforts to diversify other markets.”

Expectations for further talks

Panelists expressed varying views on how quickly trade tensions may ease, but several anticipated that discussions between the two countries would continue.

Cal Bricker, president and CEO of Spirits Canada, said the dispute has created difficulties for an industry that sends a large share of its production to U.S. buyers.

Despite those challenges, he said there are strong economic reasons for both countries to seek solutions.

“It just makes too much sense to get it sorted out,” Bricker said.

Glauber also said he hopes trade relations ultimately move back toward a more stable footing.

“I’d like to think we’d be back to a more normal thing,” he said.

For now, businesses and producers are continuing to monitor developments while considering how changing trade policies could affect investment decisions, market access, and supply chains.

Raitt encouraged producers to stay engaged with industry organizations and financial advisors and to continue communication with decision-makers about the value of the Canada-U.S. trade relationship.

“The voices have to get in there,” she said. “The government is a very broad and large instrument, and they don’t always get it right.”