Across Canada, Across Borders

Trade policy is reshaping the outlook for farmers as political decisions abroad increasingly influence prices, market access, and investment confidence at home.

The real storms shaping Canadian agriculture are increasingly political, not just meteorological. From near-constant tariff threats and trade reviews to regulatory crackdowns in Brussels and disputes in Beijing and New Delhi, decisions made in Ottawa, Washington, Mexico City, Geneva, and Brussels are shaping prices, market access, and investment on farms across Canada.

Two panel discussions on Canada-U.S. trade and international agricultural trade at the Canadian Crops Convention in Toronto in March delivered a consistent message: Canada cannot wish away its dependence on the United States, but it also cannot rely too heavily on any single customer, whether the U.S., China, or anyone else. How Canada handles trade rules, diplomacy, and market access in the next few years will matter directly to farms across the country.

Looking in the rearview mirror, Canada appears to have weathered recent trade turbulence better than many countries. Candice Laing, president and CEO of the Canadian Chamber of Commerce, noted that despite growing instability, “Canada’s doing relatively better than other countries… we’re not in catastrophic circumstances.”

But she warned the mood among businesses tells a much different story.

“Everybody I talk to says, ‘No, we’re not okay… there’s a lot of unrest… we can’t see two weeks out, basically… and that leaves us in a very uncomfortable position.’”

That discomfort is especially pronounced in agriculture, where long-term investments are constantly being made against increasingly short-term political certainty.

DISTORTED AGRICULTURE TRADE

At the global level, World Trade Organization Agriculture Director Edwini Kessie told delegates the rules-based trade system that helped fuel decades of agricultural growth is under serious strain. While about 72 per cent of world trade still occurs under WTO most-favoured-nation terms, he warned that the foundational principles of non-discrimination and predictable market access “are under attack.”

Agriculture, he argued, remains particularly distorted. Tariffs on agricultural products remain roughly double those applied to industrial goods, while countries continue to provide enormous levels of trade-distorting subsidies.

“The OECD estimates that trade-distorting support countries provide [is] over $600 billion a year,” Kessie said.

For farmers, that uncertainty quickly becomes practical. It shows up in whiplash moves in futures and basis when trade headlines break, and in hesitation around major investments in things such as bins, dryers, land, and equipment. It also raises questions about whether Canada’s strategy is to deepen North American integration, diversify beyond the United States, or attempt both at once.

To understand why those questions matter so much, panelists zoomed out to look at the broader trade map Canada operates within.

Laura Dawson, executive director of the Future Borders Coalition, outlined the basic structure plainly: about 75 per cent of Canadian exports still go to the United States, eight per cent to Europe, and roughly 12 per cent to the Asia-Pacific region.

This pattern has not fundamentally changed in decades. When Ontario grain leaves the farm gate, it enters a deeply integrated North American and global system. Corn may move into feed or ethanol sectors tied closely to U.S. markets. Soybeans may enter food-processing chains whose final products appear on grocery shelves across North America. Wheat and canola compete globally with exporters from Brazil, Argentina, the Black Sea region, and the United States.

Across Canada, different regions contribute distinct strengths. The Prairies dominate bulk grain exports and energy. Central Canada drives manufacturing and food processing. Atlantic and Pacific ports connect Canadian commodities to Europe and Asia.

What happens at Vancouver, Prince Rupert, Hamilton or Montreal ultimately influences the value of grain grown in Ontario.

EUROPEAN POLICY COMPLICATES

Kessie emphasized that agriculture trade now exceeds US$2 trillion annually. Yet the rules governing that trade are becoming less stable. Traditional tariffs still matter, but countries are increasingly turning to non-tariff barriers tied to environmental rules, pesticide regulations, traceability requirements, and domestic political priorities.

That shift is particularly evident in Europe. Greg MacDonald, Canada’s agriculture counsellor to the EU, described an agriculture system under growing internal pressure. European farmers have protested environmental regulations, administrative burdens, and trade competition. Meanwhile, Brussels is pursuing policies under its Green Deal and Farm to Fork strategy that many exporters fear could become de facto trade barriers.

MacDonald pointed specifically to proposed mirror clauses involving pesticide standards. Under those proposals, imports could face restrictions if the pesticides used are banned within the EU, even if they remain approved under Canada’s own science-based regulatory system.

“The government is very concerned about this,” MacDonald said. Canada has been challenging those proposals through WTO committees and bilateral discussions under the Canada-European Union Comprehensive Economic and Trade Agreement. The concern is not just differing standards, but whether regulations remain rooted in science rather than domestic political pressure.

Under WTO sanitary and phytosanitary rules, Kessie explained, countries must base restrictions on scientific evidence and use the least trade-restrictive measures possible.

“Even if those measures are science-based, but they are excessive, then they will still be found to be inconsistent with the WTO,” he said. Still, MacDonald acknowledged changing European policy is difficult. “It’s pushing a rock up a hill,” he said.

That matters because the EU’s regulatory influence extends far beyond Europe itself. European standards often become templates copied elsewhere, meaning decisions made in Brussels can ripple into export markets around the world.

U.S. TRADE TIES

At the same time, Canada continues pushing for greater trade diversification. Ottawa has set ambitious goals to double non-U.S. exports by 2035, with agriculture expected to carry much of that growth. But panelists repeatedly cautioned that diversification cannot mean weakening ties with the United States.

“If we achieve the goal of doubling our non-U.S. exports by shrinking our exports to the United States, that is not a growing economy for Canada,” said Meredith Lilly, a professor and Simon Reisman Chair in International Economic Policy at Carleton University’s Norman Paterson School of International Affairs. “That is a shrinking pie.”

Dawson agreed, warning the language around diversification is sometimes misunderstood. “Diversification sounds like reducing our relationship with the United States,” she said. “I think it has to be a U.S.-plus diversification, so that we don’t cut off our nose to spite our face.”

Trade strategy advisor Jeff Mahon added that agriculture is already one of Canada’s most internationally exposed industries.

“Canadian agriculture is already pretty diversified,” he said. “Telling Canadian agriculture it needs to diversify further is like telling a cayenne pepper it needs to be spicy.”

The challenge is not whether Canadian agriculture exports broadly, but whether those relationships are stable enough to support long-term investment and growth.

China is one of the clearest examples of that tension. The Prairie canola sector has repeatedly found itself caught in broader geopolitical disputes between Canada and China. Dawson expressed direct sympathy for producers facing those risks.

“My heart goes out to the canola sector,” she said. “You’re really between the devil and the deep blue sea, with the United States and China… you don’t want to be the political wedge in the middle in a conflict that is way, way out of your control.”

Lilly noted canola has already experienced multiple severe disruptions over the past decade. “This is at least the third terrible time that canola has been through,” she said. Mahon argued those experiences illustrate a broader reality agriculture has faced for years before other sectors fully recognized it.

“The rest of the global economy is finally getting to know what it felt like to be agriculture,” he said, “facing uncertainty, non-tariff barriers and the weaponization of trade.” Agricultural products are especially vulnerable because commodities are relatively substitutable. If one exporter is disrupted, buyers can often source similar crops elsewhere. Mahon pointed to how countries can impose restrictions under the guise of health or safety concerns while maintaining plausible deniability.

“You can shut down barley in Australia, and then the Canadians and Americans or Russians sell it again,” he said.

That creates enormous uncertainty for farmers whose livelihoods depend on export continuity. Political disputes thousands of kilometres away can quickly influence local basis and cash bids. Major importers can weaponize agriculture during unrelated diplomatic conflicts. Diversification across crops, buyers, and end uses increasingly functions less as a growth strategy and more as risk management.

MEXICO, A MARKET TO EXPLORE

Within North America, panelists also highlighted Mexico as an underdeveloped opportunity. Despite sharing CUSMA, Canada’s trade relationship with Mexico remains relatively modest. Laing noted that only about 3.6 per cent of Canada’s total trade involves Mexico.

Lilly called that a missed opportunity.

“Mexico is a hugely under-explored market,” she said, arguing the country’s growing middle class and expanding economy offer long-term potential for Canadian agriculture and agri-food exports.

Still, the United States remains the anchor of Canada’s economy and agricultural system. Ontario grain is deeply embedded in U.S. feed, ethanol, and food-processing supply chains. Any effort to weaken that relationship in pursuit of diversification would ultimately shrink opportunities for Canadian farmers.

That is why the upcoming CUSMA review looms so large. The agreement’s six-year review process carries a statutory deadline of July 1. Lilly explained that if all three countries agree to continue the agreement, CUSMA effectively gets another 16-year runway. If not, the deal enters a prolonged period of annual reviews through 2036. That scenario has been informally dubbed “Zombie CUSMA.”

If all three countries do not agree… then we go into a period of 10 years of annual reviews,” Lilly explained.

Dawson expects the agreement will survive, but warned stability may still erode.

“I think the agreement will survive, but not in a state that we’re going to be really happy with,” she said.

For farmers, the difference between long-term certainty and yearly renegotiation risk is substantial. Processors, railways, grain handlers, and exporters become more cautious about major investments when the trade framework underpinning continental supply chains feels unstable.

That uncertainty eventually filters back into basis levels, competition for grain and investment confidence on farms themselves.

Lilly also warned the United States increasingly expects allies to “pay for access” through side deals involving tariffs, defence commitments or industrial concessions. Even when agriculture is not directly targeted, it can quickly become collateral damage in disputes originating elsewhere. Complicating matters further are major differences in negotiation style between Canada and the United States.

“Canadian negotiators take the view nothing is finished until everything is finished,” Lilly said. “That is really oil and water to the Trump administration.”

She described American negotiations as more transactional and informal, creating risks if Canada moves too slowly while other countries strike faster arrangements.

Globally, the weakening of the WTO dispute-settlement system adds another layer of uncertainty. Kessie warned that the organization’s once-celebrated enforcement system has become partially paralyzed. Yet he argued strongly that Canada should resist abandoning the multilateral framework.

“It’s so easy… to think that free trade agreements may be a perfect substitute for the rules-based system,” he said. “But I don’t think [they] can be a perfect substitute.”

For agriculture, the WTO remains the only venue capable of addressing truly global issues such as subsidies, export restrictions and broader trade distortions.

Ultimately, all of these conversations point toward the same reality: trade policy is no longer something distant from the farm. It has become part of the production environment itself, alongside rainfall, soil conditions and commodity prices.•