CTHS Provides Details On Threatened US-Canada Tariffs

[Wandering Eyes]

In anticipation of the 25% blanket tariff on all Canadian goods entering the U.S. expected to be enacted April 2, the Canadian Thoroughbred Horse Society (CTHS) has issued an advisory to its members, aiming to provide some clarity to a fluctuating and often confusing situation.

Already this week, the U.S. government enacted a 25% tariff on Canadian steel and metal imports.

“This could very well change at any moment given whatever the will of the president is,” warned Tom Rooney, president and chief executive officer (CEO) of the National Thoroughbred Racing Association (NTRA), about the threatened 25% blanket tariffs.

“If it really is just to get people to the negotiation table to negotiate something, maybe we'll never see this. But as of right now, April 2 is the drop-dead date for when a tariff could have an impact on buying and selling horses,” Rooney added.

In response to the blanket tariffs, the Canadian government has threatened reciprocal tariffs against approximately $30-billion worth of imported goods into Canada. The country has already retaliated against tariffs imposed on steel and aluminum imports.

“While the initial round of tariffs did not apply to pure-bred breeding and racing animals, including live horses, it is likely that future rounds may include such tariffs, mirroring those imposed by the U.S.,” the CTHS wrote, about the reciprocal tariffs affecting imports into Canada.

Using information provided by the Canadian Ministry of Agriculture, Agri-Food Canada (which regulates policies and programs linked to Canada's agricultural industries) and the country's border broker network, the CTHS explained that the U.S. tariffs would apply to pure-bred breeding and racehorses “each time they cross the border.”

The organization breaks the tariff nuances down the following ways:

Mares for Breeding

• If the mare was born (“originated”) in the U.S., the tariff does not apply.
• If the mare was born (“originated”) in another country, the tariff applies and must be paid upon entry into the U.S.
• A Temporary Entry permit is available for 30 days from the date of crossing. This requires cash to secure a bond equal to the tariff value, and the owner must provide proof of the mare's value. If the mare returns to Canada within 30 days, the owner can request a refund of the bond from the U.S. government. However, proof of re-entry–such as a border services date stamp–will be required.
• If the mare is accompanied by a foal born in Canada, the foal will also be subject to the 25% tariff or require a separate Temporary Entry permit if returning to the Canada within the 30 day period.

Horses for Sale and Racing

• If the horse is intended to be sold in the U.S. at auction or by private sale and was born in the U.S. (“originated”) the tariff would not apply.
• If the horse was born (“originated”) in Canada, the tariff applies and must be paid upon entry into the U.S.
• A Temporary Entry permit is available for 30 days from the date of crossing. This requires cash to secure a bond equal to the tariff value, along with proof of the horse's value.
• If the horse is not sold and returns to Canada within 30 days, the owner can request a refund of the bond from the U.S. government. However, proof of re-entry–such as a border services date stamp–will be required.

As an indication of the sometimes conflicting nature of the news disseminated by the U.S. government, Rooney said that, as he understood the situation, the tariffs would apply to the buying and selling of horses.

“However, if a horse is going into Canada or coming to, say, Lexington to be bred, and is going to reside in Canada or the United States for less than a year, then the tariff wouldn't apply,” Rooney added.

“So, from what I gather, breeding basically should be okay, but actually buying and selling of horses that are going to cross the lines after April 2 would not, as far as being exposed to the tariffs,” he said, offering a slightly different understanding of the tariffs to the CTHS's understanding.

If enacted, the tariffs could have no small impact on the breeding and racing industries in both countries, especially for those Canadian-based breeders who sell a portion of their bloodstock in U.S. sales. Last year, 157 Canadian yearlings were entered into a U.S. auction house, bringing in more than $7.6 million in sales.

According to the CTHS, 36% of the 2023 Canadian foal crop was sired by U.S. based stallions, representing a nearly $9-million sum in stud fees.

Prolific Canadian-based owner-breeder Dave Anderson raised the specter of tariffs being imposed on runners traveling back and forth between the two countries.

“Moira would have been hit with a +$1m tariff last year. This is sending shockwaves to breeders who have indicated they won't be crossing the border to breed or race in the U.S. this spring,” Anderson wrote, highlighting Canada's winner of the 2024 GI Breeders' Cup Filly and Mare Turf.

Fasig-Tipton president Boyd Browning has a similar take.

“The proposed tariffs being discussed with regard to Canadian Thoroughbreds is obviously a concern to the U.S. marketplace. This will impact sales companies, stallion farms and many service providers that transact business on a meaningful level on a regular basis,” he said.

In Canada, there is currently a 21-day public comment period on the proposed countermeasures, with a deadline of March 25.

“We strongly encourage all industry stakeholders to submit their input through this form and request an exemption to the Canadian tariffs for purebred breeding and racing animals,” the CTHS wrote.

Likewise in the U.S., Rooney (who formerly represented Florida's 16th congressional district) recommended that anyone with strong thoughts or concerns about the tariffs should contact their local representatives.

“If you get enough people calling saying 'the tariffs are really hurting,' then you start talking to your leadership. Then you start talking about that in committees. Then the people who are going over to the White House start talking to the people on the staff there, or even the president himself,” said Rooney.

“That does have an effect,” said Rooney. “It works.”

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