Canada's natural and organic food sector strained by trade tensions with U.S

Canada's natural, organic and wellness sector is facing severe strain from ongoing trade tensions with the United States, according to the industry's main trade association.

Aaron Skelton, president and CEO of the Canadian Health Food Association, said tariffs of up to 50% on products like whey are creating significant pressure for an industry where more than 80% of businesses are small or medium-sized.

"Tariffs do not disappear into the supply chain, someone ultimately absorbs them," Skelton said.

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The CHFA estimates the sector generated approximately $26 billion in sales and nearly $40 billion in economic output in 2025, contributing over $18 billion to GDP and supporting more than 147,000 full-time-equivalent jobs.

"This is not a niche industry," Skelton said.

The trade dispute has led to a 50% tariff on U.S. whey coming into Canada and a similar tariff on Canadian whey going into the U.S. Over the 12 months ending July 2026, the whey and protein tariff codes identified by CHFA represented $629 million in Canadian imports from the U.S., while Canada exported $58 million in whey south of the border.

"These are not two separate markets. Businesses on both sides have spent decades building a shared supply chain," Skelton said.

He said companies are reviewing suppliers, reconsidering orders and making difficult decisions about pricing and production.

"We don't yet know exactly how this will affect retail prices, but businesses cannot absorb these costs forever. If the dispute continues, consumers could eventually see higher prices, tighter inventories and fewer choices," Skelton said.

Changing suppliers is rarely straightforward, he added, as many specialized ingredients are not readily available in Canada, and moving to a new source can require testing, reformulation, regulatory review and manufacturing changes.

"Companies are weighing cost against quality, compliance and reliability as they evaluate other markets," Skelton said.

The shortages extend beyond whey to gluten-free foods and specialized dairy staples caused by Canada's retaliatory measures.

"That is especially concerning because, for people with celiac disease or gluten intolerance, gluten-free food is a necessity, not an optional purchase. If these tariffs remain in place, consumers could end up paying more for fewer choices," Skelton said.

He called for immediate tariff relief on these products.

Skelton said some companies are buying additional inventory or looking for alternative suppliers, but neither is a simple solution.

"Smaller businesses may lack the capital and storage to buy in bulk, while changing suppliers can require testing, reformulation and manufacturing changes," he said.

He argued the measures work against both countries.

"U.S. suppliers risk losing Canadian customers, while U.S. businesses and consumers could lose access to established Canadian supply," Skelton said.

While tariff remission and other supports are welcome, Skelton said relief needs to be fast and accessible, especially for smaller businesses without large legal or government-relations teams.

"Canada must also address the bigger issue: making it easier to build and grow businesses here. That means targeted tariff relief now, alongside proportionate regulation, investment in domestic production and support for reaching new markets," he said.

"We can protect consumers without placing unnecessary burdens on the Canadian companies trying to invest, innovate and compete."

With files from Canadian Grocer