By Ed White
WINNIPEG, Manitoba (Reuters) – Canadian farmer Jon Vaags quit buying beef cattle in November after the election of U.S. President Donald Trump made tariffs on Canadian exports seem like a serious risk.
Now there are more than 1,000 empty spaces on his feedlot, where cattle are fattened on grain before being slaughtered for beef.
“We stopped buying feeder cattle altogether,” said Vaags, whose family’s feedlot has room for 3,000 cattle and is usually full from November until the summer.
After years of drought raised feed costs, North American farmers culled animals and did not rebuild their herds, so the beef cattle population on both sides of the border had been declining even before the threat of U.S. tariffs on Canadian exports.
Canada, the world’s No. 8 beef exporter and 10th largest cattle producer, exports more than half its beef production, with 75% going to the U.S.
The Trump administration has repeatedly listed lower food prices as a major objective. But at U.S. grocery stores, beef prices have already risen due to the smallest U.S. cattle herd in 74 years and the smallest Canadian herd in 36 years.
The average price of ground beef in U.S. cities has risen 43% since the beginning of 2020, according to the U.S. Bureau of Labor Statistics. Global beef prices are up 34% according to the International Monetary Fund.
Historically, cows, calves, breeding stock, slaughter animals and beef-in-boxes have flowed across the U.S.-Canada border as if it were not there. Canada imports many young cattle from the U.S., fattens them, slaughters them, then sends the meat back to the U.S. Tariffs would upend this process.
Trump has threatened 25% tariffs on most imports from Canada and Mexico.
The U.S. cannot easily replace Canadian beef. It is already in a beef deficit and importing from as far away as Australia. Canadian beef fills in where there is not enough U.S. beef.
Canada’s government-backed lender Farm Credit Canada would like farmers to expand their herds to grow the country’s beef industry, but says tariffs are discouraging ranchers.
Some Canadian cattle ranchers “might sit this one out for 12 months, sit this one out for six months,” said Farm Credit Canada’s chief economist JP Gervais of Trump’s tariff threats.
‘KILLING THE BUSINESS’
The impact of a declining cattle herd is trickling down to other agricultural businesses in North America, including the sale of grains purchased up to a year ahead of time to fatten cattle.
“It’s killing the business,” said Jim Beusekom, president of Market Place Commodities, a feedgrains trader in Alberta’s “feedlot alley.”
Without looming tariffs, high meat prices may have encouraged some Canadian farmers to replenish their herds. Instead, prices are prompting many to cash out by sending all the animals they can, including aging cows and young female breeding stock, into the meat market.
Canada’s cow and calf herd at the start of 2025 was 0.7% lower than in January 2024, which was 2.1% lower than in 2023. At 10.9 million head it is the smallest since 1988, according to Statistics Canada.
Curtis Vander Heyden, who runs three feed lots with his two brothers in Alberta, estimates one truckload of fattened cattle would face a $28,000 bill due to tariffs. U.S. buyers will balk at the price jump, either refusing to pay more than they would for U.S. cattle, or just not buying Canadian animals at all, he thinks. But Vander Heyden wants to retain his workforce, so he is not reducing his cattle-feeding operations.
“I can’t stop. We have employees. There are a lot of families depending on us,” said Vander Heyden.
($1 = 1.4170 Canadian dollars)
(Reporting by Ed White; Editing by Caroline Stauffer and David Gregorio)
