Alberta food processors mull potential effects of threatened U.S. tariffs

Alberta's food processing industry is scrambling to prepare for possible American tariffs. Jeremy Thompson reports.

Alberta’s food processing industry is scrambling to prepare for potential tariffs on Canadian products by the United States.

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Food processing is the second largest manufacturing sector in the province, a $28-billion industry which is now under threat.

It comprises every step a product takes before arriving on a store shelf, including turning wheat into flour and the packaging process.

One industry response to the threat of 25-per-cent tariffs is to encourage buying Canadian products whenever possible.

With food, that isn’t as straightforward as it sounds.

The Alberta Food Processors Association says different ingredients can cross the Canada-U.S. border several times before becoming the final product.

That adds to the uncertainty.

“We don’t even know how many little tariffs will go into ingredients, packaging, all these other items, that will give you your final price,” Bianca Parsons, the association’s executive director, told CTV News Edmonton on Thursday.

“That’s the other huge fear: What happens if now it really costs 50-, 60-per-cent more to make my final product?”

Several border crossings could also mean several tariffs, which could put profit margins at risk.

Dennis Darby, president and chief executive officer of Canadian Manufacturers & Exporters, said if any industry has to dial back exports to the U.S., Canada’s economy will feel it.

“It’s about a third of our whole gross domestic product,” Darby told CTV News Edmonton. “Canada relies so much on export.”

Darby said Canada’s food industry sends 27 per cent of what it produces to the U.S. – “an incredibly important market” for producers, he said – but that it “is less vulnerable” than sectors such as vehicle and vehicle parts manufacturing, machinery or chemicals, “which are really, really dependent on the U.S., well over two-thirds of those industries' (output goes to the U.S.).”

Parsons says some companies may decide to set up an American office or even move their entire operation to the U.S. to stay in business.

She says if the tariffs come in as described by U.S. President Donald Trump, Canada may need to make it easier to trade goods across provincial borders to support domestic businesses.

She gave Alberta alcohol as an example of a product that isn’t showcased elsewhere in Canada.

“We really need help in that area to say, ‘If there’s going to be these tariffs and we lose the American market, give us the Canadian market,” she said.