Uncertainty reigns as Sask. farmers, business leaders react to latest Trump tariffs

Saskatchewan farmers, business leaders and trade experts offered a hesitant sigh of relief on Wednesday, after Canada emerged largely unscathed from Donald Trump's heavily anticipated tariff announcement.

The U.S. president announced he will impose a baseline 10 per cent tariff on dozens of countries around the world as of Thursday, but will exempt items under the Canada-United States-Mexico Trade Agreement, or CUSMA.

There were fears that exemption would expire on April 2, which would have further upended Canada's trade relationship with the U.S. after months of on-again off-again tariffs.

Instead, Canada's tariff situation with the U.S. remains almost unchanged from April 1, with the exception of a new 25 per cent tariff on automobiles.

A 25 per cent U.S. tariff on steel and aluminum products launched on March 12 also remains in force.

"I would say it's a pyrrhic victory," said Simon Enoch, who studies Saskatchewan for the Canadian Centre for Policy Alternatives. "I think some Canadians will think that we escaped … but nevertheless, the 25 per cent tariff to our auto industry is going to do a lot of damage." 

In addition to reduced cross-border trade for auto parts, Enoch estimates that the price of a car in Saskatchewan will likely jump by $1,000 to $8,000.

Growing uncertainty

Chris Procyk, the vice-president of the Agricultural Producers Association of Saskatchewan, said that while the lack of new tariffs was welcome, the continued uncertainty the trade war is causing is still making life difficult for Saskatchewan farmers.

More than half of Saskatchewan's exports go to the U.S., including a third of its agricultural exports.

"We've always had kind of a safe space with the U.S. as a trading partner," Procyk said.

"And now this is all getting tossed up in the air, because there's companies and farmers on both sides of the border going, 'What the heck, we don't know where things are going one day to the next.'"

Procyk says he knows a farmer who's tied up a third of their storage space for wheat that would normally go to the U.S., but is worried that tariffs may still come.

"It's not even the tariffs anymore that's really doing the damage. It's the threat … that's compounding and has the market rattled," he said.

That sentiment was echoed by Saskatchewan NDP Leader Carla Beck, who repeated her calls for the province to focus more on interprovincial trade and invest in east-west pipelines.

"We cannot find ourselves in this situation time and time again, where we are glued to our televisions, allowing the president of the United States to dictate so much," the Opposition leader said.

Continued anxiety among Canadian businesses

Saskatchewan business owners are also being harmed by the uncertainty, said Brianna Solberg, the provincial director with the Canadian Federation of Independent Businesses representing Saskatchewan.

"Four out of five businesses have already reported being impacted by this trade war," she said, and cite rising costs and lower demand.

"They don't know whether they'll be able to raise their prices, and if customers will still be willing to pay."

Even with the CUSMA exemption, Solberg said, the tariff threat is still there, and made worse by Canada's reciprocal tariffs, which are still in place.

"Many businesses are shifting where they can to source their goods locally if possible, but that's not always feasible," she said. It may take months, if not years, for markets to steady in response to the tariffs, she said.

According to the Associated Press, about 60 per cent of Canadian exports to the U.S. do not fall under CUSMA, and would face the 10 per cent tariff. 

"We've been at this song and dance for two months now," said Keith Willoughby, who runs the Edwards School of Business at the University of Saskatchewan. "I feel like maybe the battle was won, but the war is still raging."

Willoughby shared Solberg's frustrations with the uncertain environment, and says that while Saskatchewan is less vulnerable to American tariffs than provinces like Alberta and Ontario, its economy is still fragile after weathering COVID-19, supply chain challenges and record high inflation. If more tariffs are launched, he said, they would likely start a recession. 

"I think Saskatchewan, and this country, we need to explore retaliatory measures."

The Canadian government currently has retaliatory tariffs on $30 billion of regular American imports, and additional tariffs on $28.9 billion in response to steel and aluminum tariffs.