Rail cars being loaded at Nutrien's Cory potash mine near Saskatoon, Saskatchewan, Canada Aug. 12, 2019.Nayan Sthankiya/Reuters
A farm-state Republican senator is pleading with U.S. President Donald Trump to exempt Canadian potash from tariffs, echoing concerns expressed by one of America’s largest agricultural lobbying groups.
“I plead [with] President Trump to exempt potash from the tariff because family farmers get most of our potash from Canada,” Chuck Grassley of Iowa said on X.
In a Sunday news release, the American Farm Bureau Federation – one of the most powerful interest groups in the country – said tariffs on the key fertilizer ingredient would “deliver another blow to the finances of farm families already grappling with inflation and high supply costs.”
The call for an exemption is a notable move from a political insider – at 91, Mr. Grassley is an eight-term senator – and furthers the debate about how Mr. Trump’s tariff threats will affect his voter base and the American consumer.
The timing of a price hike and disruption in cross-border trade is particularly challenging, industry group Fertilizer Canada said in a statement Sunday.
Potash is a vital nutrient for plant growth, crop yield, disease resistance and water preservation that farmers across the U.S. Midwest need ahead of the planting season, which begins shortly.
And they need the commodity from Canada, the world’s largest potash producer and source of 80 per cent of the U.S. supply, according to the American Farm Bureau Federation.
The market has already started to react to the threat of tariffs, with potash prices in the U.S. Midwest rising 4 to 5 per cent over the past week, said Steve Hansen, a managing director and equity analyst with Raymond James Ltd. who covers transportation, chemicals and agribusiness.
U.S. farmers – who comprise a significant part of the Republicans’ voting base – have few options beyond Canada. The U.S. produces little potash of its own, whereas Canada accounted for 32.4 per cent of global production in 2023, almost double the output of the next largest producer, Russia.
While tariffs on Canadian potash could make Russian potash more competitive, the supply chain cannot adapt quickly enough for the upcoming season, Mr. Hansen said. Canadian potash is transported by rail from north to south, whereas Russian potash would have to be shipped.
The higher costs of fertilizer will trickle down to the U.S. consumer, said Jared Carlberg, an agricultural economist at the University of Manitoba.
“Potash is a critical component to growing crops,” he said. “This will unequivocally result in higher food prices in the U.S., which is the opposite of what Trump said he was going to accomplish when he came into office.”
Mr. Trump has yet to heed these calls from significant voices within his party and voting base. In an address Monday afternoon, he continued to argue that, as far as Canada is concerned, “we don’t need them for anything.”