U.S. president Donald Trump’s tariff threats against Canada have potential to be more damaging to the canola industry here than China’s past actions.
China is the leading buyer of Canadian canola seed, but the United States, through its massive buying of canola oil and meal, is actually the largest canola market.
Because so much of Canada’s raw canola seed goes to China and because the Asian giant often limits or threatens canola trade, it figures prominently in the mind.
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Trade with the U.S., on the other hand, usually is conducted so smoothly that one can forget the primacy of that market.
The amount of canola grown by Canadian farmers that winds up in the U.S., in the form of oil and meal, is larger than the amount shipped to China.
Indeed, I was a bit surprised to see how much of the output from Canada’s crushing plants goes to the U.S.
The Canola Council of Canada says that in 2023, the U.S. market, mostly through its massive intake of canola oil and meal, generated $8.6 billion in sales while China’s buying generated $5 billion.
Mexico generated $1 billion and Japan $883 million.
And because of the increasing American demand for renewable fuel made from vegetable oil, the importance of the U.S. market has expanded for Canada’s canola growers.
So the industry is rightfully shocked at the prospect of an across the board 25 per cent American tariff on all Canadian imports.
“Tariffs will have devastating impacts on farmers, input providers, canola crushing activities and exports of canola seed, oil and meal,” said Chris Davison, Canola Council of Canada president and chief executive officer.
In the past, when China limited imports, some seed moved to alternative markets such as Pakistan and the United Arab Emirates. I doubt it would be as easy to find alternative markets for oil and meal.
The tariffs are on hold for a month, but Trump’s motivation is still unclear.
He appeared placated by Canada’s efforts to increase border security and crack down on fentanyl crime, but he also says he wants a trade regime that is more favourable to the U.S.
And aside from the tariff threat, the future of Canadian canola oil exports is uncertain because Trump has frozen all money that was to be distributed to clean energy projects under the Inflation Reduction Act and the infrastructure bill.
Those funds were directed to a swath of environmental projects, from electric vehicles to solar and wind energy to clean fuel such as sustainable aviation fuel and renewable diesel that use canola oil as a feedstock.
We don’t know if Trump will be able to completely wipe out what he has dubbed the Green New Deal.
So Canadian politicians and industries are furiously lobbying in the U.S. to get the message across that trade with Canada is a net benefit to America.
The canola council has analyzed canola’s positive impact on the U.S., generating a value of US$11.2 billion a year, including $1.2 billion in wages.
The analysis shows economic benefits at almost every stage, including U.S.-based processing and refining, transportation, bottling and packing, food end uses and livestock.
Let’s look at Statistics Canada export data to get more detail on America’s impact on the canola industry.
In crude canola oil exports in calendar year 2024, the U.S. was the destination for 92 per cent of all exports.
The 1.405 million tonnes sent to the U.S. generated almost $2.1 billion.
In refined canola, the U.S. took 1.94 million tonnes, or 95 per cent of all exports, generating $3.56 billion.
In canola meal, Canada exported 5.78 million tonnes in total and the U.S. took 3.76 million tonnes or 65 per cent.
The meal sales to the U.S. added up to $1.78 billion dollars.
Taken together, these canola product exports to the U.S. generated $7.44 billion in 2024.
To look at it another way, in 2024 Canadian crushers produced about 4.84 million tonnes of refined and crude canola oil. Of that, about 69 per cent went to the U.S.
As for meal, crushers produced a total of 6.62 million tonnes, and 60 per cent of that went to the U.S.
So let’s say roughly 65 per cent of canola products produced went south to the U.S.
Crushers processed in total 10.36 million tonnes of canola, so 65 per cent of that means roughly 6.73 million tonnes were crushed to make products for the U.S. market.
You can add to that total the 280,000 tonnes of raw seed that went to the U.S.
So in total, the U.S. took in the neighbourhood of seven million tonnes of seed or seed equivalent.
China, on the other hand, imported mostly raw seed, 5.86 million tonnes, plus a fair amount of canola meal and a little oil.
