Tariff Exposure for Pulse Crops

There’s a lot of concern about possible import tariffs by the US and their impact on Canadian agriculture. Of course, there’s no shortage of opinions about whether (or how) across-the-board tariffs would actually occur under the new Trump administration. Various scenarios are possible; the situation could be resolved and tariffs could be avoided altogether, only certain products might face tariffs or the percentage could be lower than the initial 25% number that’s been announced.

Despite the uncertainty, it’s still worth knowing a bit more about Canada-US pulse trade and how serious the issue could be for those crops. The answer (as it often tends to be) is, it depends. The importance of the US as a destination varies considerably by crop.

Canada’s pea exports are dominated by China and India. Over the past five years, exports to the US have averaged 200,000 tonnes, only 7% of Canadian exports. The US imports small amounts of yellow, green and split peas from Canada but the largest category, over 80% of the total in the last two years, is peas to be used as planting seed. This indicates that pedigreed seed growers would face the largest threat while other trade would see much less impact.

For lentils, the US is an even smaller trade partner with Canada. In most years, the US accounts for less than 5% of Canadian lentil exports, averaging less than 75,000 tonnes over the past five years. Just like peas, the category of “lentil seeds used for sowing” usually accounts for the largest part of the trade. As a result, US tariffs on Canadian lentils would mostly affect the pedigreed seed industry and would impact growers in the US as much as in Canada.

When it comes to chickpeas, disruption in Canada-US trade would have a larger impact. Over the past five years, the US has accounted for roughly a quarter of exports and is the largest single destination for Canadian chickpeas. While chickpeas as planting seed are a sizable part of the trade, two thirds to three quarters of the chickpeas shipped to the US are not used as seed and are destined for food and petfood sectors. Any blockage to trade would have a sizable impact on industry on both sides of the border.

Canadian dry bean exports also rely heavily on the US, which is the largest single destination and has accounted for an average of 30% of Canadian exports in recent years. Like the other pulses, planting seed is a large part of the trade, accounting for close to 60% of Canadian exports to the US in most years. Black and pinto bean exports were also a good portion of the trade. Of course, the North American dry bean market could also be affected by disruptions in US-Mexico trade, potentially shifting more Mexican business toward Canada.

There’s still a lot of uncertainty in this outlook and it’s possible that tariffs can be avoided. That would be the best case, as trade disruptions are especially damaging to a country like Canada, which depends heavily on exports. If tariffs do occur, the impact on pulse crops would be mixed, with certain sectors and segments affected more than others.

Pulse Market Insight provides market commentary from Chuck Penner of LeftField Commodity Research to help with pulse marketing decisions.