The escalating trade tensions between the United States and Canada have taken a toll on American agriculture, particularly affecting U.S. farmers. This trade conflict, initially sparked by unsuccessful negotiations between the two countries, has led to significant tariff impositions.
Following the collapse of trade discussions in mid-August 2026, President Donald Trump imposed 50% tariffs on a broad spectrum of Canadian imports valued at approximately US$20 billion (CAD$27 billion). In retaliation, Canada declared on August 25, 2026, that it would enforce counter-tariffs ranging from 15% to 50% on an equivalent value of U.S. goods starting September 8.
Canada’s tariff list targets items like dairy products and farm equipment, with the potential to extend to essential fertilizer components that American farmers heavily depend on.
Having conducted extensive research on agriculture and land management, including the influence of trade regulations on farming practices, I assess the ongoing impact of such trade disputes. If the situation exacerbates, it could force farmers to cut down on fertilizer usage due to already high prices caused by supply chain disruptions linked to the conflict in Iran. Initially, the effects might appear negligible, but prolonged trade tensions could ultimately lead to smaller harvests.
Is Agriculture the Target of Canada’s Tariffs?
While Canada’s tariffs are not explicitly aimed at farmers, the repercussions will inevitably affect the agricultural sector.
A tariff functions as a tax on imported products, inflating their costs. During Trump’s first administration in 2018, China responded to U.S. tariffs by targeting U.S. soybeans and automobiles, which hit American agriculture hard. Studies indicate that U.S. agricultural exports to China decreased by $7 billion to $10 billion annually, with Chinese buyers pivoting to Brazilian sources.
Canada’s tariff strategy matches U.S. tariffs in monetary terms. It appears that agriculture is caught in the broader economic crossfire, rather than being a direct target.
Nonetheless, the agricultural sector will feel the impact.
Canada ranks as a major market for U.S. food, importing around $28 billion worth of American agricultural goods in 2025. Both nations are heavily intertwined in agricultural trade and farm equipment sectors, with components and products crossing borders frequently. This integration means that tariffs could inflate costs throughout the supply chain. Recognizing this, Canadian authorities have included substantial financial aid for their farmers in their tariff announcement.
An analysis of Trump’s 2025 tariffs on various countries illustrates how swiftly agricultural trade adjusts under such pressures. For instance, when North American trade barriers are erected, U.S. imports of fruits and vegetables from Canada and Mexico often decline, with buyers turning to Australia and Argentina, leading to increased consumer prices in the U.S.
AP Photo/Mike Stewart
The Fertilizer Dilemma
Canada is a crucial supplier of potash, an essential component of fertilizer that U.S. farmers need.
Should tensions rise, Canada may consider imposing export tariffs on potash, and potentially on oil, natural gas, and electricity, further driving up costs for American consumers. This strategy could serve as leverage for Canada in ongoing negotiations.
Agricultural crops require nitrogen, phosphorus, and potassium. Potassium is derived almost exclusively from potash. The United States produces under 1% of the global potash supply, with over 80% imported from the Elk Point Basin in Saskatchewan, Canada. These geological limitations impact U.S. agriculture significantly.
Interestingly, potash did not feature on the U.S. tariff list, likely to avoid inflating costs for American farmers.
Impact of Trade Policy on Farming
With fertilizer costs already high, U.S. farmers are feeling the pinch.
The U.S. and Israeli conflict with Iran, which hindered shipping through the Strait of Hormuz, disrupted a substantial nitrogen fertilizer supply, leading to increased fertilizer and fuel prices. An April 2026 Farm Bureau survey revealed that 70% of farmers were unable to afford the necessary amount of fertilizer for spring planting.
Nitrogen needs annual reapplication as it leaches from the soil. In contrast, potassium and phosphorus accumulate, allowing farmers to temporarily rely on reserves if prices surge, akin to a fuel gauge that can go a couple of trips without refueling. This aligns with guidance from agricultural extension experts.
While the Iran conflict did not directly impact potash, a Canadian increase in potash prices could yield similar consequences.
Faced with soaring fertilizer prices, farmers often prioritize nitrogen application over phosphorus and potassium. However, replenishing potassium in soil is a gradual process, requiring years of fertilizer application. Even a single year of restricted potash access can have lasting effects.
Uncertainty Influencing Agricultural Decisions
Research illustrates that trade policy uncertainty impacts agricultural choices even before tariffs are enforced. Farmers uncertain about future costs may postpone purchases, hoping for price stabilization.
Fertilizer purchases often occur months before planting, so delaying acquisitions in the fall might lead to reduced application in the spring. Thus, uncertainty alone can limit fertilizer use before tariffs are even implemented.
Should U.S. farmers face heightened potash prices or shortages, the eventual effects, including potential yield reductions, could manifest as increased grocery store prices long after the tariffs are lifted.
