As global trade tensions linger, Canadian pork producers may be bracing for a financial squeeze — but not necessarily from the direction many might expect.
Paul Marchand, Senior Risk Management Analyst with HAMS Marketing Services, recently highlighted that retaliatory tariffs placed on U.S. pork by countries like Mexico could have a far greater negative impact on Canadian hog prices than any tariffs the U.S. imposes on Canadian pork.
That’s because Canadian hog prices are tied directly to U.S. pricing models. “Trump can put a 100 percent tariff on Canadian pork tomorrow and it’s not going to move the prices of my producers a nickel,” Marchand stated. “Our prices are determined using a U.S. base price. If that base price drops due to retaliatory pressure from trading partners like Mexico, then Canadian hog prices will drop too.”
Why Mexico Matters Most
Mexico, the largest importer of U.S. pork, holds significant leverage. Any retaliatory measures from Mexico — as a response to U.S. trade actions — could drastically reduce U.S. pork exports. This would create oversupply in the U.S. market, pushing U.S. pork prices down, and consequently dragging Canadian prices down with them.
“Mexico is really in a position to apply acute pressure to American pork and hog prices,” Marchand explained. While Canada ranks fifth in terms of U.S. pork export destinations, it’s countries like Mexico, China, Japan, and South Korea that hold the greatest sway.
With China already having imposed a 47% tariff on U.S. pork, the U.S. is facing mounting challenges abroad. If multiple major markets tighten their doors to American pork, a ripple effect is likely to hit Canadian producers directly through pricing formulas.
Policy Volatility and Market Uncertainty
The broader uncertainty stemming from fluctuating U.S. trade policies — especially during Trump’s administration — adds to the challenge. As Marchand notes, “there’s very little certainty on the policy front or on the legislative front.”
The Bottom Line for Canadian Producers
While Canada’s direct exposure to U.S. tariffs on its pork may be limited, its indirect exposure via pricing ties to the U.S. market means producers north of the border cannot afford to ignore the global trade chess game.
As Canadian hog farmers keep an eye on domestic operations, it’s the geopolitical moves between the U.S. and its largest pork buyers that may ultimately determine their profitability in the months ahead.
