The threat has now become a reality. As of March 4th, the United States imposed a 25% tariff on Canadian imports and Canada launched retaliatory tariffs on a range of American goods. To wrap your head around the details, the CBC has a good tariff explainer of some main points.
Canada is now in a trade war with our largest trading partner, and we’re likely to see serious and wide-ranging impacts on our food systems. However, the scope and scale of those impacts depend on what kinds of policy responses roll out and how fast.
Impacts
Overall, hard times are coming. Food prices will rise and employment will fall. In Newfoundland and Labrador, 26% of people are already food insecure. We can expect that number to increase. The data tell us that single-parent households, Black people, people with disabilities, and Indigenous people will be hit hardest.
American tariffs Impacts
Newfoundland and Labrador exports to the United States directly. The CBC has a good rundown of the sectors likely to be affected. High on that list is seafood. The impact on the fishery, particularly crab, is potentially catastrophic. We can expect to see people losing their jobs here in N.L., and an increased risk of food insecurity for the households that depended on that income.
Canadian counter-tariffs Impacts
From a food security perspective, Canada’s retaliatory tariffs will likely have the bigger impact. Those are the ones that will raise the prices of U.S.-made goods on Canadian store shelves. This includes grocery stores, since the U.S. is by far the biggest source of food imports into Canada.
Tariffs on fresh foods in particular will be some of the first visible impacts of the trade war. Fresh foods have a shorter shelf life, so stores will have to make their orders (at the new, tariffed price) sooner than with other, less perishable, goods.
Although tariffs don't necessarily all get passed on to consumers directly, evidence of experience suggests they largely will be. This is especially the case in the grocery space, where margins are very narrow. It's hard to imagine businesses swallowing much of a 25% tariff.
We also need to keep a close eye on pricing from Canadian businesses. This is an opportunity for them to raise prices on things that aren't subject to tariffs, on the assumption that customers won't notice. There is a lot of recent discussion about the degree to which this "greedflation" is a factor. Vigilance will be important.
Substitution is another thing to watch when thinking about food prices. What happens to all that Mexican fruit or Canadian beef that can't be sold at higher prices in the U.S.? Some might make its way onto our shelves and help keep prices down.
Potential Responses
One tiny silver lining is that the community sector, business, and government have had some time to think about ways to cushion the blow. We also have the recent experience of the COVID-19 pandemic, which showed us how quickly governments can roll out emergency supports in a time of crisis.
It's heartening to see a lot of alignment around what the mitigation measures could look like. They will likely include a mix of support for workers who lose their jobs, support for businesses, and direct support to people.
From a food insecurity perspective that last piece is a big one. The impacts of the trade war will hit everyone, so some broad-based relief must be a part of the mix. Thankfully, a few “off the shelf” policy designs could be rolled out in a hurry. They include:
1. Launching the Groceries and Essentials Benefit
In 2023, as inflation continued to rise, the federal government used the GST/HST credit to provide a one-time Grocery Rebate. The rebate provided much-needed relief quickly and directly, but it was only temporary. The Grocery and Essentials Benefit (GEB) builds on this model. The Affordability Action Council has recommended that the GST/HST credit be transformed into the GEB. This would provide a monthly income-tested benefit of up to $150 per adult aged 18–64 and $50 per child. The GEB could help offset the impacts of the cost-of-living crisis that the trade war is about to exacerbate.
2. Transforming the Canada Workers Benefit into an enhanced Canada Working-Age Supplement
The Canada Workers Benefit (CWB) currently provides some income support to low-wage workers aged 18–64. However, the program excludes folks who are unemployed. Maytree and Community Food Centres Canada have proposed transforming the CWB into the Canada Working-Age Supplement (CWAS). This benefit program would function similarly to its predecessor, but would include people who are not employed. It would also allow folks who are working a higher threshold of earnings before the benefit is clawed-back. These changes would triple the number of people eligible for such support (from one million to three).
3. Enhancing the Employment Insurance system
Canada’s current Employment Insurance (EI) benefit excludes many types of labour from qualifying, as well as people who have not worked a certain number of hours. Further, EI will only replace an average of 55% of the income earned while previously employed. This leaves some of those who can qualify for the benefit far below the poverty line.
Canada’s Employment Insurance system can be strengthened by increasing benefits, reducing the qualifying hours, and ensuring access for a wider range of workers.
What about “buy local” campaigns?
As the threat of tariffs loomed, we’ve already seen a burst of interest and effort around campaigns to buy local. This includes the launch of a buy local label here in Newfoundland and Labrador and countless informal online groups helping people find local products and retailers.
Buying local is very much a piece of the puzzle here. Redirecting our consumer dollars to local businesses and producers can help cushion them from trade war impacts. All these buy-local efforts are also important places for folks to connect with their communities and build solidarity through tough times.
The “buy local” conversation also reminds us that food producers in N.L. face some pretty big barriers to accessing a large-scale market inside Canada. Large food buyers, like the big grocery chains, generally require meat to be processed in a federally inspected facility, which we don’t have in the province, and food to be grown on a CanadaGAP certified farm, which we have very few of. Resolving some of these big, structural issues in our food systems will take time, but if the trade war lights a fire under these conversations, all the better.
An uncertain future
There is still a huge amount of uncertainty about what the impacts of the trade war will be and how long this will last. Some of the bigger adjustments to our food systems need a lot of time to move forward. This includes finding new markets, rethinking internal trade, and producing more locally. In the interim, we’ll look to government policies on the income side to help people make it through, and we’ll keep a close eye on the many, many moving parts of this evolving situation.
Photo credit: Erin Minuskin (Unsplash)
