Agricultural groups in California are paying close attention this month to the trade relationship between the U.S. and Canada.<\/p>\n
The North American neighbor has long been the top export market for agricultural products from California and the U.S. as a whole. But a trade conflict that began shortly after President Donald Trump returned to office last year has put that relationship on fragile footing.<\/p>\n
\u201cThere has been a lot of volatility,\u201d said James Sayre, an international trade researcher and assistant professor of Cooperative Extension at the University of California, Davis.<\/p>\n
The dispute reached another inflection point last month when the Trump administration announced plans to impose new 50% tariffs on some Canadian goods. Meanwhile, the two nations and Mexico began negotiations on the renewal of the United States-Mexico-Canada Agreement, which replaced the North American Free Trade Agreement during Trump\u2019s first term as president.<\/p>\n
\u201cThe purpose of USMCA was to secure guaranteed access for producers in all three countries into the other ones\u2019 markets,\u201d Sayre said.<\/p>\n
Bilateral agricultural trade between the U.S. and Canada last year was valued at $9.2 billion, according to federal data.<\/p>\n
On July 1, which marked the first review deadline since the trade pact began in 2020, the Trump administration opted not to approve a 16-year extension of the USMCA. The trade agreement remains in effect, but the decision by the U.S. not to automatically extend it triggered an annual review and negotiation process.<\/p>\n
Amid that backdrop, stakeholders from both sides of the border met last week at a closed-door meeting in Sacramento to discuss their priorities. Those in attendance included California Department of Food and Agriculture Secretary Karen Ross, Canadian Consul General Rana Sarkar, and representatives of various agricultural commodity groups.<\/p>\n
\u201cTrade is extremely important to California agriculture,\u201d said Matthew Viohl, director of federal policy advocacy at the California Farm Bureau, which hosted the meeting. \u201cWe want to be leaders on this, and we\u2019ll continue to take this conversation to D.C. and emphasize our goals.\u201d<\/p>\n
Among the topics discussed, Viohl said, were bans on U.S. alcohol sales imposed by several Canadian provinces.<\/p>\n
The provincial bans came in response last year to Trump\u2019s tariffs on Canadian products and his promises to annex Canada and make it a U.S. state, which caused California wine sales to Canada to plummet from $404 million in 2024 to $90 million last year.<\/p>\n
Trump cited Canada\u2019s \u201cdiscrimination\u201d against U.S. alcohol last month in his proclamation announcing new tariffs on Canadian goods, which were scheduled to take effect Aug. 19 if Canada does not meet certain conditions.<\/p>\n
The collapse of the Canadian market worsened an already bleak outlook for California winegrape growers and wine producers.<\/p>\n
\u201cThat\u2019s a really strong headwind on top of the other headwinds they\u2019re already facing,\u201d Sayre said.<\/p>\n
In recent years, a global downturn in wine consumption left the state with a persistent oversupply of grapes. In each of the past three years, some of California\u2019s winegrape crop went unpicked due to lack of demand. Last year, a record amount of around 820,000 tons of winegrapes\u2014about a quarter of the crop\u2014went unpicked, according to industry estimates.<\/p>\n
Sarkar, the Canadian official, said the country\u2019s government could not speak to the bans on California wine because \u201cdecisions on the sale of alcoholic beverages in Canada are made at the provincial level.\u201d<\/p>\n
He added, \u201cCanada remains committed to constructive engagement with the U.S. and to restoring predictability in our trading relationship, which we see as benefiting businesses on both sides of the border.\u201d<\/p>\n
California exporters of fresh fruits and vegetables also reported losing Canadian trade partners due to boycotts last year of U.S. goods.<\/p>\n
However, federal data showed overall exports of fresh California produce to Canada remained relatively stable.<\/p>\n
While Canadian consumers might be able to shift wine consumption to domestically produced wines or imports from Europe, South America, or Australia, Sayre said, it isn\u2019t as easy for Canada to source perishable goods from other continents.<\/p>\n
\u201cWine doesn\u2019t degrade if you ship it on a boat for a long time,\u201d he said. \u201cBut with something like strawberries, it\u2019s going to be hard to divert that sort of trade from California.\u201d<\/p>\n
Sayre said California commodities such as almonds have more secure access to the Canadian market because the state effectively holds a monopoly on production. With about 80% of the world\u2019s almonds grown in the Central Valley, \u201cI don\u2019t even know where else you\u2019d go (for almonds) in this hemisphere,\u201d he added.<\/p>\n
As negotiations around the renewal of the USMCA continue, Viohl, the Farm Bureau policy advocate, said free trade agreements with Canada had generally benefited California\u2019s agriculture sector\u2014even if they weren\u2019t perfect.<\/p>\n
\u201cUSMCA has been productive for all three countries,\u201d he said. \u201cThat doesn\u2019t mean there aren\u2019t ways that we would like to see it improved.\u201d<\/p>\n
Viohl said that because California farmers and ranchers are subject to some of the most stringent environmental and labor regulations, which increase their operating costs, the state\u2019s producers want to ensure international trade partners adhere to the minimum production standards outlined in trade agreements.<\/p>\n
\u201cWe just want to make sure that other countries are holding up their obligations, too,\u201d he said. \u201cWhat we really stress when it comes to trade is stability and fairness.\u201d<\/p>\n
Officials from the U.S., Mexico, and Canada are scheduled to hold another round of talks related to the renewal of the USMCA in September.<\/p>\n