SASKATOON — Canada’s organic sector might want to start singing the praises of the Canada-United States-Mexico Agreement, says a trade expert.
The North American free trade pact has done a good job of shielding them from tariffs in what is by far and away their most important market, said Matt Holmes, executive vice-president of the Canadian Chamber of Commerce.
“Next year is a critical year to emphasize that,” he said during a presentation at the Organic Summit 2025 conference.
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Why it Matters: CUSMA shields organic trade from tariffs
That is because CUSMA is scheduled for a mandated joint review in 2026.
“If that (agreement) gets ripped up next year, we’re all going to feel it,” said Holmes.
He cautioned Canadian organic producers against “creating noise” in the media about what they don’t like about CUSMA.
“You can work away at the things you don’t like,” said Holmes.
“If you lose the whole thing, it’s a problem.”
Two-thirds of Canada’s entire economy hinges on trade, and 75 percent of that trade is with the U.S.
“It’s easy. It’s next door. It’s the biggest market in the world,” he said.
“You’d kind of be crazy not to sell there or buy from there.”
U.S. president Donald Trump’s fentanyl border tariffs garnered a lot of media attention but haven’t had much impact on trade.
However, his Section 232 tariffs have had a big impact, but only on select industries such as steel, aluminum, copper and the pharmaceutical business.
Much of the remainder of the cross-border trade between the two countries has been protected by CUSMA.
Government officials on both sides of the border were surprised to discover that only 30 to 40 per cent of Canadian companies were using CUSMA to access the U.S. market.
They were instead relying on Canada’s Most Favoured Nation (MFN) status. They were willing to pay the baseline MFN tariff of 2.0 to 2.5 per cent to avoid the paperwork involved with getting CUSMA certified.
However, due to rising trade tensions, 80 to 90 per cent of companies are now CUSMA compliant.
“Suddenly it matters. You need to have your certification,” he said.
As it stands, about 85 percent of Canada’s trade with the U.S. is tariff-free, making Canada the “most strategic and privileged” country in the world when it comes to accessing the world’s biggest market.
Holmes said Canada should still be pursuing a market diversification strategy, noting that the federal government has negotiated 52 free trade agreements with countries around the world.
“We just don’t use them,” he said.
Matt Landi, vice-president of industry relations with the Organic Trade Association, a U.S. trade organization, agreed that 2026 is going to be a critical year.
Canada and Mexico are the two largest trading partners for the US$71 billion U.S. organic sector. The two countries account for 60 per cent of total organic imports into the U.S. market.
Canada exports an estimated $1.8 billion of organic goods to the U.S. annually.
Landi noted that while tariffs may protect the U.S. organic soy, corn and beef sectors, they are a net negative for his member companies.
He estimates that $9 to $10 billion of the U.S. market is hurt by tariffs, such as the 36 per cent tariff on imported sweeteners, including sugar from Brazil.
Landi said the U.S. organic sector has long established supply chains, and it is difficult to switch suppliers to avoid tariffs.
He noted that the sector was just starting to recover from the COVID setback and is now facing another demand backlash as prices are once again on the rise.
The good news for the U.S. organic sector is that it appears to have an extremely powerful ally in Robert F. Kennedy Jr., the American health secretary.
“Some congressional offices that wouldn’t talk to us before will now talk to us,” he said.
“We have people willing to sponsor legislation that previously we wouldn’t have gotten a meeting with.”
