Canada-U.S. trade war could lead to lower beef prices north of border: Sask. economist
Meanwhile, tarrifs would likely push beef prices up in U.S.
Saskatchewan's livestock industry is deeply intertwined with the U.S., and while American tariffs have once again been put on pause, any tariffs that do end up being implemented could drive beef prices up in the U.S. and down in Canada, according to an economist.
U.S. President Donald Trump said Thursday he is again pausing his tariffs on some Canadian goods, offering the country yet another roughly month-long reprieve from a punishing 25 per cent levy. It's not yet clear how the announcement will affect Canada's initial retaliatory tariffs, but they did not include live cows or beef.
Saskatchewan Minister of Trade and Export Development Warren Kaeding said he spoke with grower groups and other organizations in Minnesota, who told him cattle can move back and forth over the Canada-U.S. border multiple times over the course of their lives.
There are large packing plants in Canada, Kaeding said, but they "also depend on live cattle that come from Nebraska, from Iowa, from, you know, across the American Midwest."
"Ultimately, those industries also depend on live cattle coming back across the border."
Stuart Smyth, an agricultural and resource economics professor at the University of Saskatchewan, said the intertwined supply chain could start to break under tariffs.
Some American purchasers might choose not to source Canadian beef under a 25 per cent tariff, or scale back their purchases.
That could have effects on both sides of the border. If Americans choose to continue processing the Canadian beef despite the tariffs, the cost of those tariffs will cause prices to rise in the U.S., Smyth said. Conversely, if Americans choose to order less Canadian beef, the reduced supply would also push up prices south of the border.
"Either way, it's going to result in higher beef prices for Americans," Smyth said.
Meanwhile, in Canada, more available product could reduce the cost of beef, Smyth said. This could be nice for consumers, but harmful for producers who would have to deal with more stock — as they work toward new markets — and lower returns on their animals.
Other countries could also take advantage of Canada's strained relationship with the United States and negotiate for lower prices, further hurting producers.
Smyth said crop supply chains have experience with bad news (like crop failures), but the uncertainty from the on-again, off-again tariffs makes it difficult for farmers to adapt.
"If this is a train, it's a big, long, fast moving train and it would take months to make a pivot," he said.
"Farmers have been purchasing seed and fertilizer and other inputs, as we're just on top of seeding here, so they're very unlikely to be able to make any type of a transition away from what they've already laid cash out for."
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With files from The Morning Edition