Threatened U.S.-Canada Tariffs Could ‘Cripple’ Canadian Breeding Industry

[Wandering Eyes]

Though still weeks from being potentially enacted, the threatened 25% blanket tariff on all Canadian goods entering the U.S. is causing some Canadian-based owner-breeders to sound the alarm about the possible impacts to their businesses and to the country's broader industry.

“For us, it could be the end of the industry. Period,” warned Yvonne Schwabe, the owner of Persley Den Farms in Acton, Ontario, and the breeder of 2013 Queen's Plate winner Midnight Aria. “That's the scary part.”

As currently outlined, the tariffs are scheduled to go into effect on April 2. In response to the blanket tariffs, the Canadian government has threatened reciprocal tariffs against approximately $30 billion worth of imported goods into Canada. While the initial round of retaliatory tariffs did not apply to purebred breeding and racehorses, future ones may well mirror those imposed by the U.S., the Canadian Thoroughbred Horse Society (CTHS) has warned.

“For me to have to ship my horses early down to Kentucky and pay board bills with your very strong U.S. dollar is, as you can well imagine, not a very good situation,” said Schwabe, who expects to send about nine of her 11 yearlings currently at her Ontario property down to Kentucky early, in anticipation of the tariffs.

“I have my own farm. I have my own staff. I have my own employees. If I end up having to ship, for example, my yearlings earlier, before the April 2 deadline, how can I possibly afford to keep all my staff?” Schwabe added.

Glenn Sikura, owner and operator of Hill 'n' Dale Farms in King City, Ontario, raised concerns over several ambiguities about the proposed tariffs, including a possible 30-day “Temporary Entry” permit.

According to the CTHS, when a Canadian mare enters the U.S., the owners must front a bond equal to the tariff 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,” the CTHS wrote in an advisory Wednesday.

Tom Rooney, president and chief executive officer (CEO) of the National Thoroughbred Racing Association (NTRA), said that his understanding of the situation was that if a horse resides in the United States for less than a year, then the tariff wouldn't apply, as per the Harmonized Tariff Schedule of the United States.

Tom Rooney | NTRA

Reached Thursday, Rooney said that he hadn't yet received any official clarification on the matter, but that his office is working closely with officials in Canada to rectify discrepancies quickly. “We need to get this right as soon as possible,” Rooney wrote. “There are no doubt millions of dollars at stake in stallion fees and boarding, transportation, vet fees. The list goes on.”

Sikura's broodmare band totals 15. Nearly half are in the U.S already. He plans to send three Canadian mares (potentially facing tariffs due to their origin), currently due to foal at his farm in Ontario, to U.S. stallions this year. That amounts to $130,000 in stud fees. His U.S. stud fees total roughly $500,000 annually, he said.

If indeed it is enacted, the 30-day cap would be an almost impossible window to navigate for Canadian breeders looking to send their mares to a U.S. stallion, given the vagaries of mares in heat, the time it takes to guarantee a pregnancy, and other bureaucratic obstacles, Sikura said.

“How can we possibly go down there and be back within 30 days? It's not possible and it's poor husbandry. So, you forfeit whatever bond you have in place,” said Sikura, who sits on the CTHS, but stressed that his remarks are strictly his own.

Furthermore, fronting the bond in the first place–even if it is returned–could also be a massive hurdle to some breeders, said Sikura.

“I'm a working guy. I've done reasonably well for myself. But where do I come up with tens of thousands of dollars to post bonds at the border?” he said.

The following details are included in the CTHS's Wednesday advisory to its members:

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.

Dave Anderson, Canadian-based owner-breeder and CTHS president, said that, if the tariffs are indeed enacted come April 2, “it's fairly simple–the entire industry in Canada will be crippled.”

Every year, Anderson breeds over 30 mares, all of which are covered by U.S. stallions.

“If we can't cross the border, or if we're subject to a 25% tariff, those mares just won't come across the border. They'll remain in Canada,” said Anderson.

“This will certainly benefit the Canadian stallions, and stallion owners. But we just don't have enough good stallions to support those mares,” he added.

Curtailed cross-border trade would also impact U.S. industry stakeholders.

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.

Then there's the potential impacts on cross-border traffic of runners.

According to the CTHS, a 30-day “Temporary Entry” permit (similar for mares to be bred) is available, requiring a cash bond equal to the tariff value, returnable with proof of re-entry.

But what if the horse, said Anderson, needs to stay in the U.S. for longer than those 30 days? And how, he added, will the value of an individual horse be calculated?

“Just because a horse is by, say, Into Mischief, doesn't mean it's worth $500,000,” said Anderson. “It might have [osteochondritis dissecans] OCDs in both stifles and standing on three legs and it's worth $500. But how do you explain that to a border agent?” he added.

Mark Casse | OBS

Disrupted trade in runners would likely hit both ways. Mark Casse told TDN that if the tariffs go into effect, he'll likely send 40 to 50 horses to Woodbine this summer as opposed to his usual 75 or so.

In a letter to the Canadian federal government Thursday, Woodbine president and CEO Michael Copeland warned of the impacts on racing and breeding from retaliatory tariffs–especially in light of existing tariffs on goods coming into Canada (like feed, medications and other essential goods) that put Canada's breeders, trainers and owners at a “competitive disadvantage” compared to the U.S., where such tariffs are not applied.

“We are concerned about the potential for future tariffs on live horses, which would further destabilize the industry. The movement of horses across borders is essential for breeding, racing, and sales, and any additional trade barriers would have severe economic consequences,” Copeland wrote.

“Woodbine Entertainment strongly believes that purebred Thoroughbred, Standardbred and Quarterhorse horses used for breeding and racing purposes should be exempted from the implementation of the proposed countermeasures in response to the new U.S. tariffs on Canadian goods,” he added.

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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