Normally, I'd start a message here with something like "Happy Sunday Yodlers" but today my normal vibe is disrupted. Like many of you, I've spent the weekend, tyring to unpuzzle what the current trade war implications are for Canadian food and beverage businesess and their partners.
This is a dynamic situation and the points below are written and shared using informaation avialable publicly as of about noon on Sunday, August 23rd. I hope you find this info helpful and ask that you share your opinions and interpretations in the comments section so that we can crowd source a play book for CFIN members to use to make good business decisions and strategies.
Background: In case you were camping in a remote area with no Wi-Fi or news, let me recap where we are as of noon on Sunday, August 23rd in the ongoing trade war launched by the US on Canada in January of 2025: Saturday at midnight, the U.S. imposed a 50% tariff on a defined list of Canadian goods under Section 338 of the Tariff Act of 1930. Talks between Ottawa and Washington collapsed Friday night. Canada announced it will retaliate dollar-for-dollar starting September 8, hitting U.S. steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics. Mark Carney astutely labeled the situation: "You're at war when you get attacked. We got attacked."
If you've seen headlines calling this a "food tariff," here's the correction worth sitting with: it isn't. It's a narrow, product-specific action that happens to land hard on a few food and beverage categories - while leaving most of the sector untouched, and in some cases handing it an opening.
That distinction is the whole ballgame for how CFIN members should be thinking about the next six months.
What's actually being tariffed?
Three proclamations, signed July 20, took effect August 22 after a brief suspension:
1. Dairy - milk, butter, cream, whey, lactose, casein, and related derivatives. ~52 tariff classifications.
2. Alcoholic beverages - beer, wine, cider, and spirits.
3. Motor vehicles - despite the name, this contains almost no vehicles (those are already under Section 232). It's actually the broadest of the three actions: roughly 400 tariff lines covering everything from cement and plywood to furniture, apparel, and - the one that catches people off guard - honey, hop cones, cut flowers, live plants, seeds for sowing, salt, and essential oils. Needless to say, this will affect a lot of Canadian agricultural and food companies.
Two things matter more than the list itself:
CUSMA does not protect you here. A valid certificate of origin does not exempt a covered product. This is the single most common misunderstanding we're seeing, and it's worth checking directly with your customs broker rather than assuming.
The legal ground is genuinely unsettled. Section 338 has never been invoked before. Litigation at the U.S. Court of International Trade is expected, and there are open questions about whether the administration followed the correct process. That's not a reason to wait and see - but it is a reason to treat today's product list as current, not permanent.
Where do CFIN Members face the most exposure?
The tariff is real and severe where it hits, but it hits a narrower band than "Canadian food exports" as a category. Don't let one loud 50% number convince you your whole book of business is exposed.
High Exposure:
· Dairy Directly named, broad classification coverage
Spirits, wine, beer, cider - entire alcohol category covered
· Honey - specifically listed but easy to miss given the "motor vehicles" label
Mixed Exposure:
· Bakery
· Confectionery
· processed foods,
· ingredients
Low Exposure:
· Meat
· Seafood
· Grains
· Pulses
What Really Matters.
Monday morning as your team gathers around the boardroom table to unpack the developments that happened this weekend, you need to evaluate your business' true exposure.
Tariff exposure alone doesn't tell you who's business is actually at risk. Substitutability of your export item is what really matters. Cross those two variables and you get four very different situations:
Worst Case Scenario: Companies who export a tariffed commodity and generic products are the most vulnerable category right now because a U.S. buyer can easily substitute standardized Canadian dairy, bulk honey, or generic spirits with very little friction. Canadian businesses in this category should expect lost volume, margin compression, or both.
Best Case Scenario: Those exporting tariffed but differentiated products are not absolved of risk but are in a slightly better position. A distinctive Canadian whisky, a premium wine, a specialty cheese or unique ingredient are items where the U.S. customer may absorb part of the tariff because the product isn't easily replaced. The strategic question isn't "how do we avoid the tariff," it's "how much of the 50% can we pass through before demand breaks."
Moderate Risk Zone: Anyone who runs a business that sells to tariffed but highly substitutable items should be on guard because US buyers, may emulate our own behaviour and seek to support homegrown products. Frozen food, commodity ingredients, agricultural processing may dodge the 50% entirely, but a U.S. buyer can still ask, "why take Canadian supply risk at all when I can buy American?" As this trade war groans on weary US retailers and manufacturers who have been Canadian customers are likely to press the easy button on and choose domestic inputs.
Lowest Risk: There is actually an opportunity afoot for those Canadian food companies who are exporting non tariffed, highly differentiated ingredients and finished goods. This is where those who have invested in proprietary processes, formulations that serve unique consumer needs, and IP convert directly into pricing power.
My Sub Sector Insights:
Because CFIN members are working in many different domains within the food sector, I spent a bit of time thinking about the current situation from the perspective of food and beverage processors, manufacturers, foodtech solution providers and investors.
For processors and manufacturers:
If you're in the high-exposure commodity bucket, the near-term questions are pricing pass-through, alternative markets, and whether U.S. inventory positioning ahead of further escalation makes sense.
If you import U.S. equipment or inputs, watch Canada's September 8 retaliation list closely - agricultural equipment is explicitly named, which means your cost side could move too, not just your revenue side.
For foodtech companies:
You're mostly outside the tariff's direct line of fire - this action targets dairy, alcohol, and a basket of consumer/industrial goods, not ingredient tech or processing IP. But the "quiet risk" category applies to you if your product competes on cost against a U.S. alternative. This is a moment where differentiation - proprietary formulation, functional claims, defensible IP - matters more than it did six months ago, because "why buy Canadian" is a question U.S. buyers are now asking by default across categories, tariffed or not.
For investors in Canadian food:
The interesting signal isn't the companies getting hurt - it's the companies positioned to gain share from hurt competitors, and the companies whose moat (IP, exclusivity, formulation) just became more valuable because substitution got harder for their specific customers. Portfolio-level, this is a good moment to ask which holdings are commodity-exposed versus differentiation-protected, independent of whether they're directly tariffed.
Okay, now it's your turn. How do you see the situation?