Donald Trump's impending presidency brings with it the threat of high tariffs on imports from numerous countries, including Canada. This potential policy shift has sparked concern among Canadian companies, particularly those in the food sector, which historically enjoys a trade surplus with the U.S. However, industry experts predict that these companies will not make hasty decisions despite the looming threat. Instead, this situation could serve as a catalyst for enhancing Canada's domestic food processing and manufacturing capabilities.
Canada's dependency on imported goods, especially from the U.S., has increased over recent decades. The decline in the country's food processing and manufacturing capacity has made it more reliant on imports. As some Canadian companies contemplate moving operations across the border due to uncertainty, business groups urge the government to take action to prevent a chill on investment and expansion within the industry.
“We’re already seeing … a bit of a chill on investment and expansion and a chill on hiring,” said Dennis Darby.
Technology offers Canada an opportunity to grow fresh produce year-round, reducing its reliance on imports. While some products heavily depend on U.S. imports, experts argue that U.S. tariffs on Canadian goods could accelerate a shift towards bolstering domestic food processing and manufacturing.
“I’d be surprised if somebody’s prepared to make major shifts in their production capacity based on what Trump says,” remarked Roderick MacRae.
Nevertheless, the potential for long-term tariffs could increase the likelihood of businesses considering significant changes.
“But if we get into a world with 25 per cent tariffs that look like they’re going to be in place for an extended period of time, the likelihood of that increases over time,” explained Tyler McCann.
Investment in domestic capacity could stabilize prices for certain items, a crucial factor in maintaining consumer confidence. The Canola Council of Canada has already begun expanding its domestic processing capabilities to mitigate potential trade or supply chain disruptions. Other recent investments include a soy processing facility in Ontario, Hershey's return to its Ontario facility, and McCain Foods doubling the size and output of its Alberta processing facility.
“Until … we actually focus our attention on a strong manufacturing strategy for food in this country, we’re just going to continue to try to incentivize people to do things, but not necessarily have a strong plan in place,” stated Michael Graydon.
Calls for a comprehensive government strategy to support businesses at risk of relocating are growing among industry leaders.
“I think we need to see more of a comprehensive approach from the government around how are they going to support those businesses that are at risk of moving to the United States,” Tyler McCann emphasized.
