New trade threat could disrupt North American agriculture as U.S. farmers brace for rising input costs
Just hours after announcing a multi-billion-dollar aid package to support U.S. farmers struggling with rising costs, President Donald Trump hinted at imposing new tariffs on agricultural products—including Canadian fertilizer. The move underscores the growing uncertainty surrounding trade negotiations between the United States and Canada.
“A lot of it does come in from Canada, and so we’ll end up putting very severe tariffs on that, if we have to, because that’s the way you want to bolster here,” Trump said. “And we can do it here. We can all do that here.”
Why Fertilizer Is in the Crosshairs
The United States is Canada’s largest fertilizer customer, accounting for well over half of Canada’s total fertilizer exports each year. Annual Canadian exports of fertilizer to the U.S. range from $3.2 billion to $4.5 billion CAD, making it a critical component of North American agricultural trade.
Despite significant domestic production—averaging 13 million tonnes per year of nitrogen as ammonia—the U.S. cannot meet its own demand. To fill the gap, it imports 3 to 4 million tonnes annually, primarily from Canada, Trinidad and Tobago, and interestingly Russia.
Potential Impact on Farmers
If tariffs are imposed, U.S. farmers could face higher input costs at a time when margins are already tight. Fertilizer is one of the most significant expenses in crop production, and any price increase could ripple through the entire supply chain, from grain producers to livestock operations.
Canadian producers, meanwhile, could see reduced access to the Canadian fertilizer’s largest market, forcing the industry to seek alternative buyers or absorb losses. This could also strain long-standing trade relationships and complicate negotiations under existing agreements.
Industry Concerns
Agricultural economists warn that tariffs on fertilizer could lead to:
- Higher production costs for U.S. farmers, potentially reducing competitiveness.
- Supply chain disruptions, as alternative sources may not be readily available.
- Volatility in global fertilizer markets, with ripple effects on pricing and availability.
What’s Next?
While no formal tariffs have been announced, Trump’s comments signal that trade tensions with Canada are far from resolved. Farmers on both sides of the border will be watching closely as negotiations continue.
Facts from Fertilizer Canada
- $23 billion in annual economic activity generated from fertilizer in Canada
- 76,000 jobs in Canada
- 12% of the world's fertilizer supply
- 95% of Canada's potach production is exported