The threat of U.S. tariffs on Canadian goods has prompted calls for increased government support to bolster domestic food processing and manufacturing. While some companies contemplate moving operations south, experts believe a strong manufacturing strategy is crucial to mitigate the potential impact.
Experts suggest that U.S. tariffs on Canadian goods could precipitate a surge in domestic food processing and manufacturing, although some companies contemplate relocating operations south. However, to achieve genuine transformation, they emphasize the necessity of increased government support .
Michael Graydon, CEO of Food, Health and Consumer Products of Canada, stated, '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.' The incoming U.S. president, Donald Trump, has threatened substantial tariffs on imports from countries including Canada, raising concerns about inflation within the U.S., but also the potentially devastating impact on Canadian agriculture, food companies, and consumers.Canada's food processing and manufacturing capacity has significantly declined in recent decades as the country's reliance on imported products has increased, according to Graydon. However, following the supply chain disruptions caused by the COVID-19 pandemic and other disturbances, 'I think there is a resurrection of this desire to be more self-sufficient,' he remarked. Canada generally enjoys a trade surplus with the U.S. in the realm of food, meaning it exports more than it imports, stated Tyler McCann, managing director of the Canadian Agri-Food Policy Institute. However, certain products, he noted, on which Canada heavily relies on imports from the U.S. Experts indicated that Canada is particularly vulnerable in these areas, such as fruits, vegetables, and processed foods like jams, sauces, and snacks. McCann suggested these sectors could be promising targets for bolstering domestic capacity.Today, several 'pushes and pulls' are invigorating interest in reinvesting in domestic operations, according to Evan Fraser, director of the Arrell Food Institute at the University of Guelph. Technology is one such driver, as Canada now possesses more tools to cultivate fresh produce year-round. However, on a broader scale, he stated that supply chain disruptions and geopolitical tensions are sparking greater interest in so-called 'nearshoring,' or shifting operations closer to home. Roderick MacRae, a retired associate professor at York University's Faculty of Environmental and Urban Change, concurs that a larger shift is underway, making it crucial to rebuild resilience into the domestic food system. 'I think international trade is breaking down,' he observed. Recent investments on Canadian soil include a soy processing facility in Ontario slated to open next year; Hershey's return to the Ontario facility it vacated in 2007; U.S. company Blommer Chocolate expanding its Ontario site; and an investment by McCain Foods to double the size and output of a processing facility in Alberta. The Canola Council of Canada previously informed The Canadian Press that the industry has been expanding its domestic processing in recent years to mitigate potential trade or supply chain disruptions.More domestic capacity would contribute to stabilizing prices on certain items, asserted Fraser. However, he cautioned that it's easier said than done to build up that capacity. Graydon agreed, emphasizing that the costly, multi-year projects require more government support for a genuine shift—not just government funding, but a 'strong food manufacturing strategy.' In other industry sectors where there's a significant trade surplus with the U.S., tariffs may make companies apprehensive about investing further in Canadian operations, said McCann. 'It seems like the uncertainty will really put an investment chill on Canadian food processing,' he stated, which could entail companies postponing plans to expand or upgrade existing plants. McCann posited that for the present, major companies are more likely to delay investments in their current facilities rather than relocate capacity south of the border. '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.'McCann echoed the sentiment that the government should be doing more to prevent this scenario from unfolding. '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,' he insisted. Several business groups this week called on the government to assist Canadian firms in mitigating the detrimental effects of potential tariffs and retaliation. Dennis Darby, president and CEO of Canadian Manufacturers and Exporters, stated that businesses are responding to the uncertainty by delaying plans to invest in operations or expand, and he expressed concern that some could move production to the U.S. 'We’re already seeing … a bit of a chill on investment and expansion and a chill on hiring,' he revealed. MacRae suggested that Canadian companies may be apprehensive about Trump’s pronouncements, but they won’t make hasty decisions.
CANADA TARIFFS FOOD PROCESSING MANUFACTURING GOVERNMENT SUPPORT TRADE
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