Red potash is stored in a warehouse at Nutrien’s Cory Potash mine near Saskatoon, on Feb. 11.Matt Smith/The Globe and Mail
Facing pressure from U.S. farmers, President Donald Trump has lowered the threatened tariff rate to 10 per cent for Canadian potash – a fertilizer essential to all major American crops.
The move was announced in an executive order signed Thursday afternoon alongside a broad delay on all tariffs on Canadian exports compliant with the United States-Mexico-Canada Agreement until April 2.
Potash is likely to receive this reprieve. The new rate for potash will come into force should Mr. Trump reinstate tariffs.
Before the announcement, the fertilizer was set to face a tariff of 25 per cent, in keeping with most other Canadian goods.
The lower potash tariff, which is in line with proposed levies on Canadian oil and gas and U.S.-classified critical minerals, still falls short of the full exemption or outright cancellation many U.S. agricultural associations had called for.
However, observers say, the change in plans signals that Mr. Trump’s tariff policy is vulnerable to pressure from his constituents and the larger agricultural sector.
U.S. Secretary of Agriculture Brooke Rollins has argued that tariffs will balance trade deficits and therefore help struggling farmers and rural communities, but many U.S. farmers disagree.
“The reduced 10-per-cent tariff is welcome, but will still lead to higher fall potash prices,” said Veronica Nigh, senior economist at the Fertilizer Institute, a U.S.-based association representing the industry.
Trump won’t admit it, but Canadian potash fuels American agriculture
One of the most powerful ag-industry interest groups in the agricultural industry, the American Farm Bureau Federation, responded to the news Thursday afternoon calling for a permanent resolution to the trade war.
Approximately 85 per cent of the potash used by U.S. farmers comes from Canada, the AFBF said. The only other major global producers, Russia and Belarus, account for around 15 per cent, and Eastern Europe lacks the production capacity and supply chain logistics to boost these supplies.
For U.S. farmers, a tariff on potash was therefore a hard pill to swallow. Producers of almost all of the country’s largest crops are facing three years of losses, the AFBF. And these farmers hold significant political weight: Mr. Trump won all but 11 of the country’s 444 farming-dependent counties in the 2024 election, according to Investigate Midwest, an independent, non-profit newsroom.
Farm-state Republicans and farming associations across the country had been calling for exemptions on potash, or an end to the tariff threat altogether.
Saskatchewan-based Nutrien Ltd., the world’s largest potash producer, had sought to hammer home the message that higher crop inputs lead to undue pain for farmers when they can’t afford it, said chief executive Ken Seitz.
“This message is about the importance of domestic food security,” he said in an interview last week.
This had given potash an edge in the looming trade war between Canada and the U.S.
“We need to make sure America feels the pain,” Ontario Premier Doug Ford said in a press release Tuesday. “… Without potash down there, [the U.S.] doesn’t have a farming system.”
Farmer clout seems to have changed Mr. Trump’s policy, said Evan Fraser, director of the Arrell Food Institute at the University of Guelph. And this seems to have minimized the power of his threat.
“The dog is barking but he doesn’t have a lot of bite.”
What happens next is yet to be seen, as some farming associations remain unsatisfied with the reduced tariff.
Any tariffs on potash are bad for business over all, said Josh Gackle, chairman of the American Soybean Association, a farm group that has continually pushed against the Trump administration’s levies.
Soybean farmers know the pain of tariffs all too well, said Mr. Gackle, a third-generation soybean farmer from Kulm, N.D.
Mr. Trump’s first-term trade war with China led Beijing to cancel all imports of U.S. agricultural goods. It cost the sector US$26-billion from 2018 to 2019 and was particularly painful for soybean farmers, for whom China was their largest export market.
The US$16-billion in federal aid did not cover the losses, and more importantly, it didn’t make up for the damage to the industry’s global reputation, Mr. Gackle added. Facing what had become an unreliable trading partner, China sought markets elsewhere – notably boosting the U.S.‘s major soybean competitor, Brazil.
Mr. Gackle is concerned the President’s second-term trade war will repeat history, only worse, with retaliatory tariffs coming from Mexico and Canada as well as China. This will isolate U.S. farmers from most of their major markets.
The biggest market for corn, the U.S.’s largest and most lucrative crop, is Mexico, while Canada is the top market for corn-based ethanol. Canada is also a valuable and important export market for U.S. soybeans.
Mr. Gackle said the tariffs will cost dearly in the short term and into the future. He said they undermine trade relationships and hurt the country’s reputation, and despite what the Agriculture Secretary says, they won’t solve the trade deficit.
Customers “look elsewhere when the U.S. becomes less reliable because of tariffs, trade wars and other disruptions. … It hurts the farmers here at home.”
Mr. Fraser agrees, saying that the continued threat of a trade war, despite an established trade deal, carries lessons the country should not forget.
“The bottom line remains the same: Canada can no longer trust the U.S.”
The tariffs announced by U.S. President Donald Trump have upended decades of free trade in North America, causing chaos on both sides of the border.
Alongside the chaos come many questions about how this will affect Canadians’ lives, and Globe reporters are here to help you navigate those. Perhaps you’re curious about how this might impact the sector you work in, or maybe you’d like to know what this means for your mortgage. Tell us what you want to know about these new levies, and we’ll do our best to answer. Please submit your questions below or send an email to audience@globeandmail.com with “Tariff Question” in the subject line.
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