Saskatchewan businesses and industries brace for effect of US tariffs
Ryan Kiedrowski,
Local Journalism Initiative Reporter
There’s been much speculations on how possible tariffs from the United States could impact Saskatchewan. Locally, businesses are preparing for the effects of tariffs. Stan Langley runs Universe Satellite Sales in Rocanville. The threatened action from the States has prompted his business to stock their inventory a little earlier than usual.
“We order the parts anyhow every year to have for fall and during the winter, so we’re just doing it a little earlier,” he says. “We’re not getting the huge discounts that we would normally do in a booking time. We’re gambling, but we’re going to have the parts. We might have three months of inventory where we would only have one month of inventory, but you’re just going to have inventory a little longer.”
Langley doesn’t see anyone benefitting from the proposed tariffs—except for those in the upper echelons of government.
“It’s going to cost everybody a lot of money,” he said. “It’s a tax that goes on to the people, so it’s going to make the governments rich and going to make us poorer. Everything is priced high now, and if you put 25 per cent tariff on stuff, then it’s out of reach. So it’s just going to stall absolutely everything.”
Langley is not entirely convinced that the tariffs will come to pass.
“I have to wait until the day it happens to believe it’s going to be happen,” Langley said, adding he doesn’t think Trump will follow through. “A lot of the people that voted him in are losing their jobs, and I think as soon as the weather warms up and they can start protesting a little easier, you’re going to see a ton of protests over there.”
Relations between Canada and the U.S. account for $1 trillion in trade annually, with an estimated $3.6 billion worth of goods going back and forth.
“Overall, I think a trade war with the U.S. is a fight that we’re probably going to lose,” said Tyler Thorn, owner of Celebration Ford in Moosomin, and president of the Community Builders Alliance. “I just think the U.S. is too big and too dominant that if we get into a serious trade war there, it’s not going to be good for the Canadian economy in general. Certainly it’s going to be tough on the Saskatchewan economy, because we’re so export-based.”
Vehicles are the second largest Canadian export by value, with 2023 numbers showing $51 billion of which 93 per cent were exported across the border to the U.S. With that highly-integrated nature of the auto industry, parts used in building those vehicles, no matter the origin, might cross Canada, the U.S. and Mexican borders up to eight times before final assembly.
“It’s very complex, I think, in the automotive manufacturing industry on how the tariffs will impact it,” Thorn said. “Certainly, that will drive up the price of the cars, the cost to produce will then be higher due to the tariffs and then the finished product.”
Thorn foresees retaliatory tariffs on automobiles coming, perhaps not in the first wave, but likely the second round.
“You don’t have to be a mathematician to realize that if we add 25 per cent to the price of a vehicle coming onto our lot, it’s going to be a little tougher to sell that car,” he said.
As for how the proposed tariffs might affect the local economy in Moosomin, Thorn hopes the strong sense of community pride and desire to shop local continues.
“The consumers in our region are fairly cognizant of shopping local and how important that is,” he said. “Hopefully, people realize and remember that those small businesses are the ones that are creating the jobs and providing the services and are the ones supporting all of our hockey tournaments and our recreation facilities and our music festivals. It’s all those small businesses that are writing the cheques to sponsor those events and help make sure they happen, and to me it’s really important that local consumers think about that aspect of it when making shopping decisions.
“Without those small businesses supporting those events and those fundraisers and those projects, they don’t happen,” Thorn continued. “Or if they do happen, the cost to the people involved in it goes up without the businesses sponsoring. Hopefully, people consider that when making their decisions, but it’s going to be a challenging time for everybody.”
At Rocky Mountain Equipment, parts and sales manager Tyler Jones summed up the sentiment as “wait and see.” With a busy seeding season not too far off, Jones pointed toward local manufacturers as the answer.
“The good thing is most of the seeding equipment around here is made in Canada anyway, so it shouldn’t affect us with both Bourgault and Väderstad,” he said. “We did do an order back in January, so I don’t think we’re too worried about that.”
In terms of back-ordered parts, Jones noted if the tariff situation continues more long-term, it could be an issue.
“Covid I think was a bigger deal for back orders,” he said. “We’re in a ‘wait and see’ mode—is everything going to be included in the tariffs, or are certain things not? It’s going to make things a lot worse if they do happen.”
Province responds by pushing stronger trade relationships
While many voices across Canada are bolstering support for reactionary tariffs, firing back to repeat history as in the 2018 tariff melee, the Saskatchewan government has a different approach. Last week, Premier Scott Moe wrapped up a mission to Washington, D.C., joined by provincial business and organizational interests, to strengthen relations between trading partners.
Last year, top exports from the province were crude oil ($12.5 billion), potash ($4.2 billion), and canola ($2.9 billion), with agri-food products making up 21.9 per cent of total exports.
Melville-Saltcoats MLA Warren Kaeding—who also serves as the provincial Trade and Export Development minister—was recently in Minnesota, which he noted is Saskatchewan’s largest export state. He had the chance to discuss trade relationships and how the tariffs will affect their interests.
“The American farmer right now is suffering significantly economically,” Kaeding said. “It didn’t matter if they were dairy, poultry, crop production or livestock, all their ag sectors were suffering from a pretty significant economic downturn.”
One source noted an increase of 55 per cent for Chapter 12 bankruptcies in Minnesota during 2024 from the year previous, increasing to 216 cases.
“That’s the opportunity we had was to break it down dollars per acre, dollars per unit, what a tariff may cost them,” Kaeding said. “That actually resonated the best of almost any discussion we had in the U.S. right now.”
Hitting back with retaliatory tariffs might not be a fruitful response, and Kaeding favours discussion over fighting.
“We do so much better when we work together than when we are fighting against one another, and that’s ultimately what tit-for-tat tariffs are going to do, is just pit one industry against another,” he said. “Nobody wins, the consumer loses.”
Coming off a trade mission to Vietnam and Singapore, Kaeding says he’s heard several messages of support for the view Saskatchewan has on dealing with the tariff threat.
“At the Canada-in-Asia Conference, I met with people from all across Canada, and literally every one of them came up to me and said, ‘your premier, your government, is on the right track’,” he said. “That’s the message that we need to get across to all our American colleagues. If this is being validated across the country, we’re obviously on the right track.”
Agriculture could take big hits
The Conference Board of Canada released a report on Feb. 19 that looked at the impact of U.S. tariffs on Canadian imports, assuming retaliatory tariffs are imposed as a response. In their projections, Saskatchewan would be one of the provinces most affected by the coming tariffs due to a heavy reliance on the America market. The goods sector makes up 40 per cent of the province’s GDP, which is the highest of any province, many of those being exports. The report predicts GDP in Saskatchewan to drop 1.4 per cent below baseline in the second quarter, with that decline driven by downturns in oil, potash, and agriculture sectors plus supported industries.
“The biggest concern right now is there’s so much uncertainty,” said Bill Prybylski, President of the Agricultural Producers Association of Saskatchewan. “If the U.S. tariffs come into play, obviously that’s going to hurt our commodity prices. Some of that may already be built into the prices that we’re seeing, but we’re likely going to take a hit. Everything we buy in terms of equipment and parts is going to certainly be affected by it, and not in a good way.”
While the federal government prepares to launch retaliatory tariffs to fire back at the U.S., Prybylski isn’t convinced that is the correct response.
“It may be our only weapon at our disposal, but that’s scary in itself,” he said. “The retaliatory tariffs may do more harm than the tariffs themselves. It’s somewhat concerning that there may be some significant hits to agriculture in the second round of counter tariffs. From what I understand the first batch, there isn’t anything too significant that we need to worry about in Saskatchewan agriculture. But if the second round of counter tariffs come to be, I’m concerned that there may be some significant impacts to producers, particularly in things like fertilizer. We rely heavily on imports of phosphate fertilizer, for example, coming out of the southern states, so if there’s tariffs put on fertilizer, that’s going to have a huge impact on producers, particularly this time of year, going into seeding.”
A best case scenario according to Prybylski is an agreement that benefits all involved.
“Ultimately, we would like to see a negotiated deal where tariffs don’t come into play at all,” he said. “That would be the best thing. We have a long-standing trade relationship with the United States that’s been very lucrative for both countries, and to see decades of work thrown out the window in one stroke of a pen would be very disappointing.”
For producers, there are programs such as AgriStability through the Saskatchewan Crop Insurance Corporation, but Prybylski notes such venues are slow to react to situations such as tariffs.
“We would like to see a commitment from the federal government that industries that are forced to pay the retaliatory tariffs, that any monies collected from those tariffs be put back into those industries to help offset those extra costs,” he said, adding that farmers south of the border might just be an ally for Saskatchewan producers.
“The American farmers may be our biggest ally in this, in that if they start feeling the hits financially, which obviously they’re going to, they may be able to put pressure on their elected officials to put an end to things as quickly as possible, and to resume normal trade again. It’s been beneficial for both countries, so why would we want to disturb that and destroy decades of work?”
According to a report from the USDA, American farmers lost around $27 billion in exports between 2018 and 2019 due to the tariffs during the first Trump administration. Soy and pork producers were the hardest hit, and many farmers relied on government subsidies just to stay afloat. This also resulted in $12 billion in aid programs through the USDA.
Timing crucial for potash
Nutrien held a conference call with investors on Feb. 20 after fourth quarter earnings in 2024 were disclosed last week. In that fourth quarter, $118 million USD was realized—down 33 per cent from $176 million USD from the year previous. Earnings were also down 45 per cent for the full financial year to $700 million USD and sales down 1 per cent at $30 billion USD. The company says the lower earnings were mainly due to lower prices and sales volumes of potash, but strong crop input demand is expected in the potash sector for 2025.
On the topic of tariff risk for the industry, Ken Seitz, Nutrien’s President, CEO and Director explained how the company has met “with governments on both sides of the border, and we continue just to emphasize how reliant the U.S. farmer is on something like Canadian potash,” pointing out that Canadian supply makes up more than 80 per cent of the market.
“We struck up a cross-functional team which extends across our government relations group, our commercial organization to make sure we can serve our U.S. customers in the way that we always have,” he said. “And of course, in our finance group as we look at the mechanisms that might be in place to actually collect tariffs and how we would go about that.”
Seitz also noted that the cost and impact of the tariff action would be borne by American farmers, the very group who felt the brunt of Trump’s 2018 tariffs.
“I will say that timing of this is all in question, of course, as we look at the 30 days and look at the April 1 review, so that it could be or maybe even likely is the case that we’ll feel the U.S. farmer will feel those impacts after the spring planting season here,” Seitz said.
Mark Thompson, EVP, Chief Commercial Officer and CFO with Nutrien, spoke to how tariff-related assumptions play out on the high and low ends of global shipments range (between 13.6 and 14.4 million tonnes).
“At that midpoint of 14 million tonnes, we assume relatively limited impact from potential tariffs and really no material supply chain disruptions to speak of,” Thompson said. “So that would generally characterize the midpoint of our guidance.”
The upper end of that scale would see no impact from tariffs or supply chain disruption, while the lower end could see change.
“It’s really the potential timing impacts that any tariffs would have on demand in North America, and we do see that more as a timing-related factor, and that would sort of characterize how we’re thinking about that 13.6 million tonnes on the lower end of our guidance,” Thompson explained.
Sask businesses crippled
The threat of possible tariffs from the U.S. seems to be the latest in a litany of hits endured by small and medium business in Saskatchewan. According to statistics from the Canadian Federation of Independent Business, one-quarter of small businesses in the province are in trouble.
“We know that right now, 25 per cent of Saskatchewan small businesses are saying that they are in either weak or critical financial health,” said Brianna Solberg, the CFIB’s Provincial Director for Manitoba, Saskatchewan, and the North. “Their business is struggling as it is already because all of their other costs have increased, taxes have increased, and consumer demand hasn’t bounced back to where it was pre-pandemic, so their revenues are also down.”
With the interconnected supply chain relying heavily on the U.S. market, the effects will be substantial.
“More than one in four businesses who do trade with the U.S. purchase over half their goods from U.S. suppliers, and one in three who trade with the US generate over half of their sales in the U.S.,” she said. “This strong reliance leaves businesses highly vulnerable to trade disruptions and rising costs, and obviously there’s a trickle down from that.”
Trading businesses are those directly involved in importing or exporting, with around half of small businesses falling into that category.
“Around 15 per cent of those actually export directly to the U.S., so they would be slapped with that 25 per cent tariff,” Solberg explained. “But ultimately, the trickle down effects are significant all the way down the supply chain. It will impact every business and there’s just a lot of uncertainty and limited preparedness because they don’t know how to protect their business from this. It’s something completely out of their control. Over half of businesses say they’re unprepared to manage the impact of these tariffs.”
With the Canada Post strike, the GST holiday, and getting shortchanged on a carbon tax rebate, there hasn’t been much optimism in the small business community.
“Now this looming uncertainty of tariffs, it’s been a lot of doom and gloom and I think businesses are wondering if they can actually continue like this, or if it would be easier to just close their doors,” Solberg said. “Our members are concerned about the April 1 carbon tax increase, we know the cost of the carbon tax is going to go up $15 per ton, and that’s ultimately something that our members want to see scrapped in order to help offset the cost increases of potential tariffs.”
The CFIB has also been seeking clarity on the carbon tax rebates, which have finally begun being issued to businesses, but are subject to tax.
“They did announce a plan to return that money, and rebates did start flowing at the end of last year, but now just another hurdle—businesses just found out that those would be subject to tax, and so that’s something we had sought clarity on when the rebates were first announced,” Solberg said. “The politicians said that they were never intended to be taxed, but CRA is moving forward and taxing them, so they’re not on the same page. We would need for government to no longer be prorogued and legislation to be introduced in order to make them tax free.”
One solution Solberg envisions is both focussing on an internal “Saskatchewan first” model and courting markets outside our borders. Both provincial Trade and Export Minister Warren Kaeding and Agriculture Minister Daryl Harrison have been on trade missions recently, which does inspire confidence.
“I think it is absolutely necessary for Saskatchewan to go out and promote itself to external markets, especially outside of the U.S., considering what’s happening right now,” said Solberg. “Businesses would be wise to do the same. We know that some who have the resources are already looking at external markets, and at the same time, we need all provinces to work together to reduce trade barriers, because ultimately, they exist for a reason.”
According to the CFIB, around 75 per cent of businesses see retaliatory tariffs as a good idea; in Saskatchewan, about half are in favour of the plan. However, this might be a case of utilizing the limited tools at hand.
“I think ultimately they believe that other measures would be more beneficial, so actually looking to address some of the issues that may have necessitated these tariffs in the first place, so like strengthening our border, and they also want to see taxes reduced for them to be able to operate more efficiently,” Solberg said.
Trump has stated the 25 per cent tariffs on Canada and Mexico will happen on March 4, plus an additional 10 per cent for China on the same date.
Ryan Kiedrowski,
Local Journalism Initiative Reporter
The World-Spectator
