Trump’s tariffs on Canadian potash: Here’s what you need to know

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United States tariffs on Canadian potash may be going up on Wednesday as U.S. President Donald Trump moves to impose reciprocal tariffs on all its trading partners, including Canada, just as a previous exemption limiting the levy to 10 per cent expires.

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Trump has hailed April 2 as “Liberation Day” for the U.S. and said the new round of tariffs will match surtax charges countries impose on American imports. The White House said on Monday that reciprocal tariffs would go into effect immediately.

Meanwhile, April 2 is also the date an exemption reducing potash tariffs to 10 per cent from 25 per cent are set to expire.

Here’s what you need to know about the Trump administration’s tariffs on Canadian potash and their potential impact on the fertilizer industry and American farmers.

What potash tariffs are in place right now?

Canadian potash imports into the U.S. are currently subject to 10 per cent tariffs.

Trump imposed 25 per cent tariffs on potash on March 4 as part of sweeping tariffs on all Canadian imports coming into the U.S. But on March 6, he placed a pause on the blanket tariffs, exempting goods covered under the Canada-United States-Mexico Agreement (CUSMA), and lowered the potash tariff to 10 per cent following pushback by a number of industries, including farming.

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A potash tariff of 25 per cent would be especially painful for American farmers, given their heavy reliance on the mineral to fertilize their crops.

What do U.S. tariffs mean for Canada’s potash industry?

Eighty-five per cent of potash imported into the U.S. comes from Canada. The country has 10 producing potash mines, all of which are located in Saskatchewan.

Saskatoon-based Nutrien Ltd, which operates six potash mines in Saskatchewan and is the world’s largest potash producer, has said the cost of any tariffs will be borne by farmers in the U.S. Ken Seitz, the company’s chief executive, said at a mining conference in February that potash tariffs won’t impact the company’s bottom line.

“The cost of tariffs will be passed onto the U.S. farmer; that’s our view,” he said.

Generally, the U.S. consumes 10 to 11 million tonnes of potash each year.

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In February, Seitz said the company was working to move as much volume as possible into the U.S. to get ahead of tariffs.

What additional tariffs could Canadian potash face?

Though the exemption reducing the potash tariff to 10 per cent from 25 per cent is set to expire on Wednesday, it’s not yet clear if Trump will move ahead and raise the surtax.

It’s also not clear if potash will face additional levies under the reciprocal tariff plan, or how much they might amount to.

Trump has said he is looking to match the rate of fees charged on American goods when imported into other countries.

“Whatever countries charge the United States of America we will charge them, no more no less,” he said on Feb. 13, when he first announced the reciprocal tariffs plan.

Canada’s national Goods and Services Tax (GST) could also be in Trump’s crosshairs. He has complained that the GST is equivalent to a tariff, leaving open the possibility that Canadian imports will face at least an additional five per cent tariff.

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Meanwhile, the White House has indicated that any new tariffs announced on Wednesday will stick, even if they affect American farmers.

Karoline Leavitt, Trump’s spokesperson, said this week there will be “no exemptions at this time” in response to a question about whether lower duties would be applied to products used by American farmers.

Trump is set to announce his reciprocal tariffs plan at the White House at 4 p.m. ET.

A spokesperson for Nutrien declined to comment when asked about additional tariffs on potash.

Are there alternative markets for Canadian potash?

Seitz said Nutrien is expecting potash demand to grow, with Brazil and markets in Southeast Asia the primary drivers. The company is also optimistic about expanding into India.

“They continue to move toward more balanced fertilization, so we’re seeing growing demand in India,” Seitz said.

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Nutrien also anticipates future growth for potash as biodiesel mandates start coming into effect globally, driving up demand for palm oil and potash to produce it.

Russia’s invasion of Ukraine has also opened up markets in Europe to North American potash. Previously, those markets were supplied by Russia and Belarus, both of which are now under international sanctions.

Mark Thompson, Nutrien’s chief financial officer, said work is underway to build a customer base in Europe, which historically has not imported potash from Canadian Potash Exporters (Canpotex) companies, such as Nutrien.

“I think it’s really just the historical shift in the mix,” Thompson said in the summer of 2024.

If U.S. sanctions are lifted on Russian potash, how will that affect the fertilizer industry?

The U.S. has said it will help lift Western sanctions on Russian products, including potash, in exchange for the safe passage of ships through the Black Sea, a vital shipping route for Ukraine.

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“The United States will help restore Russia’s access to the world market for agricultural and fertilizer exports,” said a White House briefing on the agreement.

The European Union has had sanctions on Russian potash since February 2022, according to the U.S. Department of Agriculture. Canada imposed tariffs of 35 per cent on Russian potash one month later.

In Saskatchewan, there is concern lifting of sanctions will hurt domestic potash producers. NDP Leader Carla Beck has said Russian potash could flood the market.

Still, Russia might face barriers in the U.S., thanks to Trump’s reciprocal tariff policy, which is expected to cover all U.S. trading partners. Trump said on Monday the U.S. needed tariffs because it has been “ripped off by every country in the world.”

Russian potash producers might also have trouble stepping up to meet any additional demand. In February, Uralkali PJSC, a major player in Russia’s potash industry, said three of its mines were set to go offline due to maintenance. The company said these moves would reduce output by 300,000 tonnes.

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How has Saskatchewan responded to the possibility sanctions will be lifted on Russian potash?

Last week, Saskatchewan Premier Scott Moe called the plans to lift sanctions on Russian potash “disturbing,” given the country was continuing to wage war in Ukraine.

Moe also said the development might change how the province responds to American tariffs, though he did not provide specifics and has not yet announced any shifts to the strategy.

So far, the premier has opposed placing export taxes on goods shipped to the U.S. in retaliation against tariffs. The province has instead responded by pulling American-made alcohol from store shelves and is working to source goods for public procurement domestically.

What do tariffs on Canadian potash mean for American farmers?

Farming organizations, along with elected representatives in states with major agricultural industries, have called for potash to be exempt from tariffs and pressure from those groups has been credited with getting tariffs down to 10 per cent instead of 25 per cent.

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The American Farm Bureau Federation, which advocates on behalf of farmers, has been calling for a resolution to the dispute and said agricultural producers are in a rough spot. 

“For the third straight year, farmers are losing money on almost every major crop planted,” a statement on the organization’s website said. “Adding even more costs and reducing markets for American agricultural goods could create an economic burden some farmers may not be able to bear.”

During Trump’s first presidency, when a trade dispute with China cost American farmers access to that market, the government provided farmers with an aid package of US$16 billion. But many producers said that wasn’t enough to cover their losses or make up for long-term market losses.

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Farmers may see assistance this time around, too. U.S. Agriculture Secretary Brooke Rollins told media this week that she has been directed to put programs in place to assist farmers with the economic fallout of tariffs.

With additional reporting from Financial Post, Bloomberg, The Canadian Press

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