Role of international politics on agri‐food trade: Evidence from US–Canada bilateral relations

Abstract

A well‐functioning trade relationship between Canada and the United States is crucial to the economic vitality of the Canadian agri‐food industry. However, agri‐food trade is more susceptible than other sectors to political interventions. The Trump presidency has strained Canada–US relations and his trade policy actions have significantly increased trade restrictions and trade policy uncertainty and undermined the rules‐based global trading system. We examine the pattern of agri‐food trade between the two countries and find that the upward trajectory of bilateral agri‐food trade ended in 2013. Although this flatlining predates the Trump administration, we show that Trump increased trade policy uncertainty starting in 2017 and likely impacted further expansion of trade. We examine what might change under the Biden presidency and argue that the new administration is likely to restore strong relationships with allies and work to rebuild important international institutions such as the World Trade Organization (WTO). Although protectionist forces will continue to impact bilateral agri‐food trade, we expect closer political ties between a Biden administration and the Canadian Prime Minister. This should have a positive effect on the Canadian agri‐food industry by reducing trade uncertainties, thereby increasing agri‐food trade between Canada and the United States.

Do regional trade agreements affect agri‐food trade? Evidence from a meta‐analysis

“…Agri‐food disputes at the WTO are substantial due to the numerous barriers to agriculture trade (Afesorgbor & Beaulieu, 2021; Santana & Jackson, 2012). RTAs are expected to address these disputes and barriers, and thus, have a greater impact on agricultural than on nonagricultural trade.…”

Food-based bilateral trade balance performances between the United States and Canada under COVID-19

“…The USA and Canada are critical partners under the USMCA 2 and the foremost countries where the J-curve hypothesis has been tested due to their significant bilateral trade volumes. This may cause that the U.S.-Canada food bilateral trade is considered vital for both countries, as it significantly supports both economies (Afesorgbor and Beaulieu 2021 ). For example, in 2022, the U.S exported approximately $17.9 B food products to Canada, making it its second-largest export market.…”

“…This increase may suggest that the rising bilateral trade is carried out harmoniously within the framework of full bilateral coordination-relationship without any disputes. However, in 2017 the U.S. government under President Trump’s administration has imposed tariffs on food products to protect its farmers, while Canada has retaliated with tariffs on U.S. food products (Beaulieu 2018 ; Cantin and Duchesne 2019 ; Afesorgbor and Beaulieu 2021 ; Grant et al 2019 , 2021 ). These trade disputes with retailed tariffs threatened to disrupt the previously harmonious trade relationship between the two countries and has highlighted the complex economic and political issues that underpin international trade (Afesorgbor and Beaulieu 2021 ; Grant et al 2019 ; Grant et al 2021 .…”

“…However, in 2017 the U.S. government under President Trump’s administration has imposed tariffs on food products to protect its farmers, while Canada has retaliated with tariffs on U.S. food products (Beaulieu 2018 ; Cantin and Duchesne 2019 ; Afesorgbor and Beaulieu 2021 ; Grant et al 2019 , 2021 ). These trade disputes with retailed tariffs threatened to disrupt the previously harmonious trade relationship between the two countries and has highlighted the complex economic and political issues that underpin international trade (Afesorgbor and Beaulieu 2021 ; Grant et al 2019 ; Grant et al 2021 . Additionally, the charts 2 and 3 in appendix 2 (Supplementary Material) show the percentages of food products exported from the USA to Canada and vice versa.…”

The Short-Term Impact of COVID-19 on Labour Market Outcomes: Comparative Systematic Evidence

“…Under the aegis of then-President D. Trump who not only staged an attack on the WTO by refusing to appoint new members to the WTO's Appellate Body, but also launched trade wars against China, North American Free Trade Agreement (NAFTA) and the European Union (EU), putting further strains on world trade and international cooperation. Afesorgbor and Beaulieu (2021) argue the Trump presidency strained diplomatic relationship with close allies and undermined the rules-based global system, and this therefore created uncertainty for global trade.…”