Al Mussell, research lead and co-author of a new study, said Canadians have to understand how the new U.S. policies are not in their best interests. Photo: File
Observers say the American government’s move toward deregulation could have sweeping consequences for Canadians.
A new policy paper warns Canadian agriculture to prepare for changing U.S. domestic policies that seek efficiencies through deregulation.
The paper from Agri-Food Economic Systems said this could include food inspection.
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Co-author and research associate Douglas Hedley said U.S. president Donald Trump’s administration is trying to deliver promised tax cuts that will cost US$500 billion to $1 trillion per year, starting in 2026, and add significantly to the country’s debt. It is using tariffs to try to pay for these.
“What’s at stake is the potential for sharp changes in inflation, interest rates, currency valuations and U.S.-international trade relations, and that could just be the beginning,” he said.
Al Mussell, research lead and co-author, said Canadians have to understand how the new policies are not in their best interests.
Deregulation presents specific concerns, he said.
For example, it’s unknown if state and local agencies could manage food inspection at a consistent level across the country if the Food and Drug Administration steps back.
“It also raises the issue of how the U.S. manages its obligations of like treatment of imported products, which must meet federal standards, versus what actually occurs on the ground under state and local administration of food inspection,” the paper said.
“And to the degree that state/local inspection could be lower cost than U.S. federal inspection, it raises the worry that the U.S. may come to view federal inspection requirements of other countries, and associated costs, as a barrier to trade.”
Mussell said there has been no official announcement regarding deregulation, but it is part of a trend.
“This administration takes action first and worries about the consequences later,” he said.
“Fundamentally, the U.S. can’t afford the tax cuts the president wants to put through, and now they’re simply pulling out all the stops to try and eke this out somehow.”
Canada could become collateral damage as the U.S. attempts to generate every last efficiency through deregulation done “in the crudest possible manner,” Mussell said.
In terms of food inspection, he said deregulation presents risks to the public that aren’t currently present, such as possibly more incidents of illness. People might not discriminate between imported and American meat, for example, when it comes to which caused the problem.
“If this goes badly enough, then Canada and other countries may have real concerns about importing from the U.S.,” Mussell said, and that then raises the risk the U.S. won’t take products from those countries.
The paper said how the risks are interpreted for imports compared to domestic U.S. products is unknown. U.S. imports could be at a cost disadvantage if they have to meet federal standards at origin but compete against domestic products inspected at a lower cost.
Mussell said deregulation will also form a regulatory baseline the U.S. will bring to any international trade talks. Any differences from their regulations could become viewed as discriminatory costs on exports of U.S. products.
As well, there could be pressure on U.S. trading partners to harmonize regulatory standards. Mussell said this should concern Canada and Mexico because a U.S. executive order already encourages the two to align on the American policy of Chinese vessels.
Meanwhile, as the U.S. negotiates country-by-country trade deals that are more like purchase orders, he said that could seriously hamper Canada’s market access.
Mussell added that dealing with regulations requires the use of a scalpel and not the sledgehammer the Trump administration is using. He said the administration appears willing to burn the house down to get its tax cut in place.
“That would be merely intriguing political drama that we could be watching from north of the border if it didn’t affect us, but it does affect us,” he said.
Those effects include inflation, rising interest rates and a weaker Canadian dollar.