Donald Trump’s presidency is sure to affect Canada’s economy in a big way. Or should I say, “bigly.”
In particular, Alberta’s Industrial Heartland could be directly affected by President Trump’s policies, for better or for worse. Trump’s almost immediate approval to move forward with the Keystone XL Pipeline shows he’s more open-minded and business-oriented compared to his predecessor. This is obviously good news for Alberta from an economical standpoint, as it provides expanded market access and more locations to refine our bitumen. Trump’s insistence that pipelines built in the United States are made from American steel could result in fewer Canadian manufacturers benefiting from the pipeline’s construction, but that loss is minor compared to the estimated 4,500 jobs the pipeline’s construction would bring.
What is less certain is how Trump’s beef with the North American Free Trade Agreement (NAFTA) will affect Alberta’s ranching industry. In Prime Minister Justin Trudeau’s recent meeting with Trump, the golden-haired chief executive said he intended to merely “tweak” the NAFTA agreement, at least from the Canadian side, as he was primarily concerned with his country’s trading agreement with Mexico.
Canadian ranchers’ history with the United States (US) has been as long and prickly. The US, which imports about a million live cattle from Canada annually, banned Canadian beef and cattle for a year in 2003 after the mad-cow disease debacle. That led to a $150-million lawsuit which stemmed from Alberta ranchers accusing the States of protectionist policies.
From what I’ve read, NAFTA was seen as both a blessing and curse for Canadian ranchers, as it opened the US market for ranchers, but also allowed US meat-packing companies into Alberta, who play a role in driving down the value of the processed product.
According to the Canadian Press, between 1993 and 2016 under NAFTA, Canadian exports to the U.S. rose an average of 4.5 per cent annually. Specific to beef, the US imported 628 million pounds of beef from Canada in 2015, equal to about $3.7 billion Canadian. That was the largest value since 2002, indicating that the US continues to grow as the most important export market for Canadian ranchers.
In 2008, the US implemented the COOL (country-of-origin labelling) program for Canadian meat, which required Canadian beef and pork to have stickers listing their origin. That was ultimately repealed in late 2015, in a move that was seen as a victory for Canada.
The World Trade Organization estimated that the COOL policy cost Canadian cattle and hog producers about $1 billion annually.
But Trump’s administration has promised to get a better deal for the US, so a reimplementation of protectionist policies such as COOL is a very real possibility.
Furthermore, Trump has pulled out of the Trans-Pacific Partnership, which effectively renders the partnership obsolete. That deal was seen as a potential boon for Canadian ranchers, as it would expand access to Asian markets by possibly removing export tariffs to countries such as Japan. Currently, Japan has 38.5-per-cent tariffs on beef from Canada, compared to 27-per-cent agreement with Australia. In a January Edmonton Journal article, Canadian Cattleman’s Association president Dave Solverson called the tariff “very prohibitive”.
Alberta ranchers don’t want to get outflanked or T-boned by Trump, so it’s important that they make their voices heard as negotiations move forward.
All in all, it’s evident from Trump’s words and actions that he’s looking out for the United States and the United States alone. It remains to be seen how his “tweak” of the NAFTA agreement could affect Canada’s ranching industry.
Until then, ranchers, hold your horses, but not your breath.