Question Period Note: CANADA-UNITED STATES (U.S.) AGRICULTURE RELATIONS AND TARIFFS

Q1 – What is the Government of Canada doing to support the agriculture sector? Q2 – How is AAFC engaging with the agriculture sector and decision-makers in the United States? Q3 – What is AAFC doing to support diversification efforts for agriculture and agri-food products? Q4 – What is the Government doing to promote Canadian agriculture and food products in Canada? Q5 – What is the status of the 2026 Canada-United States-Mexico Agreement (CUSMA) review? Q6 – Has the agriculture sector been able to comply with CUSMA?

R.1 - • The Government of Canada has put in place financing and advisory assistance through financial Crown corporations for businesses, along with support for workers and temporary 6-month relief for goods imported from the U.S. that are used in Canadian manufacturing, from which the agriculture sector can also benefit.
• These measures will build on existing supports for Canadian agriculture businesses, including AgriStability and AgriInvest, that offer short-term support to address market related impacts on producers.
• On March 7, 2025, the Government of Canada announced that the Advance Payments Program (APP) interest-free limit will be set at $250,000 instead of $100,000 for the 2025 program year.
• Additional support through AgriStability was also announced on March 22 to increase the compensation rate from 80% to 90% and doubling the current payment cap to $6 million for the 2025 program year offers.
• We are working to help the agricultural sector weather this storm and be even more resilient on the other side. R.2 - • There is no more important economic relationship than that of Canada's with the United States.
• We are committed to working with the U.S. Administration to demonstrate the mutual benefits of our current agricultural trade relationship, including highly integrated supply chains.
• The previous Minister of Agriculture visited Washington the week of February 24 where he had the opportunity to meet with U.S. congressional leaders, including House and Senate Chairs and Ranking Members of Agriculture Committees, State Secretaries, as well as key U.S. agriculture stakeholders.
• He also met virtually with Secretary Brooke Rollins on March 10, 2025, and we hope to have follow-up discussions in the near term to discuss specific issues.
• We have excellent and well-established relationships between government and industry and industry-to-industry which benefits our connected supply chains. R.3 - · We have a number of programs and services to help Canadian companies showcase their products on the global stage and facilitate exports to priority markets.
· This includes our Indo-Pacific Agriculture and Agri-Food Office, which is focused on positioning Canada as a trading partner of choice in the fastest-growing economic region in the world.
· We are working hard to promote the Canada Brand around the world - strengthening Canada’s reputation as a reliable supplier of a diverse range of quality, sustainable, and innovative products.
· Canada recently concluded negotiations with Indonesia and Ecuador and is actively negotiating with the Association of Southeast Asian Nations (ASEAN), as well as having discussions between Costa Rica and Comprehensive Progressive Trans- Pacific Partnership (CPTPP) Parties for the accession of Costa Rica. R.4 - · The Government of Canada is working with provinces, territories, and industry associations to promote clear and transparent product labelling to help consumers be more confident in identifying Canadian products.
· The Government of Canada is reminding the food industry and importers of their responsibility to ensure that their labels are accurate and not misleading consumers in Canada. Accurate labelling creates a fair marketplace that benefits both consumers and businesses.
· The Canadian Food Inspection Agency (CFIA) created a web page on how to identify Canadian food with a quick reference guide about the different words or symbols they may find while grocery shopping – some mean the food has Canadian content, while others mean it meets a Canadian standard for quality, or organic content. R.5 - · We are ready to review CUSMA with the U.S. and Mexico at any time, whether in 2026 as scheduled or earlier.
· We remain prepared to engage with U.S. officials to advance our shared economic prosperity and security in North America. We will always defend Canada’s interests and what is best for Canadians.
· CUSMA is a successful trilateral agreement that strengthens the whole North American region. It is in our common interest to ensure it continues to support our shared prosperity.

• [If pressed on the 2025 dairy review]: Canada will preserve and defend its supply management system. R.6 - • The vast majority of Canadian agriculture exports comply with CUSMA – 96% of agricultural goods benefit from duty- and quota-free access into the U.S.
• The utilization rates for agriculture goods under CUSMA is also higher than in other sectors.
• AAFC has been and will continue to engage with stakeholders to hear about their experiences and challenges to comply with CUSMA. To date, AAFC has heard minimal concerns from agriculture stakeholders with regard to meeting CUSMA compliance requirements.

Agriculture Trading Relationship
The U.S. is Canada’s most important market for agriculture and agri-food products, with Canadian exports valued at nearly CAD C$56.6 billion in 2024, representing 61.4% of Canada’s global exports for these products. During the same period, Canada imported CAD $38.0 billion in U.S. agriculture and food products. Canada’s largest exports included bakery products, canola oil, and beef. The U.S. is also Canada’s largest fish and seafood export market, valued at CA$5.5 billion in 2024. Canada’s largest sector imports from the U.S. were undenatured ethyl alcohol with alcohol content higher than 80% (e.g., ethyl alcohol for fuel), various food preparations, and bakery products. Canada is an important and mutually beneficial partner for agriculture and food trade for the U.S., as Canada is the 2nd largest export market for the U.S. as well as 2nd largest import origin, accounting for one-fifth of the U.S.’s import needs.

Canada is the top agricultural export market for 28 U.S. states, including all border states (except Washington) as well as high population states such as California and New York.

Canada-United States-Mexico Agreement (CUSMA) review
CUSMA includes a commitment to undertake a joint review of the Agreement after six years (2026). CUSMA also mandates a review of certain Canada-U.S. dairy-related provisions, set out in Chapter 3, in July 2025, and every two years thereafter. In preparation for the upcoming CUSMA and dairy reviews, the Department has begun analysis and engagement with other government departments, Canadian industry, and other stakeholders to prepare for a range of scenarios.
Following the President’s inauguration on January 20, 2025, a Presidential Memorandum (“America First Trade Policy”) was issued to address unfair and unbalanced trade. Of relevance to CUSMA, it ordered U.S. officials to: 1) start the public consultation process for the July 2026 CUSMA review; 2) assess the impact of the agreement on U.S. stakeholders; 3) make recommendations on U.S. participation in the Agreement, and 4) report to appropriate congressional committees.
Canada’s priority will be to ensure that market access and the other benefits of the Agreement are preserved in any discussions with the U.S. and Mexico. A Gazette public consultation process was completed by Global Affairs Canada in the fall to gather views from stakeholder priorities and concerns as Canada prepares for these discussions.
Tariffs on U.S. imports
On March 6, 2025, President Trump signed an Executive Order to adjust tariffs on Canadian goods. As of March 7, , Canadian exports can continue to enter duty-free under CUSMA if they claim and qualify for CUSMA preferences (i.e., meet CUSMA’s rules of origin) and receive a duty-free tariff concession under the U.S. Tariff Schedule are exempt from tariffs. Non-CUSMA compliant goods face a 25% tariff, or 10% for energy products and non-originating potash. A few agricultural goods (e.g. certain dairy products, sugar and sugar-containing products) are subject to the fentanyl tariffs if they do not qualify for duty-free treatment of the U.S. tariff-rate quotas (i.e. within-access TRQs)
On March 12, 2025, Section 232 tariffs on all imports of aluminum and steel took effect. Canada is the largest exporter of steel and aluminum to the U.S.

On April 2, 2025, President Trump announced “reciprocal tariffs” declaring a 10% baseline tax on imports across the board starting April 5, 2025, and higher rates for dozens of nations that run trade surpluses with the U.S. to take effect April 9, 2025, but most of the higher tariffs were suspended hours after going into effect. Canada and Mexico were not implicated in the reciprocal tariffs but the 25% (or 10% for energy products) tariff for non-CUSMA compliant imports still apply.
On April 3, 2025, the U.S. imposed global tariffs of 25% on imports of automobiles and light trucks under Section 232 of the Trade Expansion Act. For Canada and Mexico, the tariffs on automobiles and light trucks will apply to the non-U.S. content of vehicles imported under CUSMA preferences, and to the full value of vehicles not imported under CUSMA.
Canada’s Response to U.S. Tariffs
Canada imposed reciprocal tariffs of 25% against C$30 billion in imports of goods from the U.S., effective March 4, 2025, On March 13, 2025, in response to the U.S. steel and aluminum tariffs, Canada imposed a 25% reciprocal tariff on a list of products totaling $29.8 billion including steel products, aluminum products, and additional imported goods. On April 9, 2025, in response to U.S. automobile tariffs, Canada imposed a 25% tariff on non-CUSMA compliant vehicles imported into Canada from the U.S., and a 25% tariff on non-Canadian and non-Mexican content of CUSMA compliant vehicles imported into Canada from the U.S. Canada is closely monitoring tariff threats made by President Trump and assessing the unintended impacts this may have on the agriculture sector.

• Canada and the United States have a long-standing and strong trading relationship in agriculture – one that benefits both of our countries.

• Last year, Canada exported almost $62.1 billion in agriculture and seafood products to the U.S.

• Canada imported almost $39.2 billion of agriculture and seafood products from the U.S. in 2024, and is the number one agriculture export market for 28 states.

• Our supply chains are deeply integrated, allowing us to supply safe and affordable food year-round.

• Canada will continue to defend Canadian farmers and businesses against trade distorting measures and is committed to working with the Trump Administration to further deepen the strong ties between our two countries.

• Canada will continue to engage with the U.S. for the permanent removal and prevention of additional tariffs by the Trump Administration.