The U.S. has imposed countervailing duties on fresh Canadian mushrooms, saying growers benefited from unfair subsidies tied to agricultural tax treatment.
The United States has imposed countervailing duties on fresh mushrooms from Canada after a Commerce Department investigation concluded Canadian producers benefited from unfair government subsidies.
The change, posted in the U.S. Federal Register on Monday, applies a 2.84 per cent duty to most Canadian fresh mushroom exporters. Champ’s Fresh Farms Inc. received a lower rate of 1.62 per cent, while Farmers’ Fresh Mushrooms Inc. was assigned a 4.97 per cent rate.
The duties add a new point of friction to Canada-U.S. agricultural trade as the two countries, along with Mexico, review the trilateral trade agreement known as CUSMA. Separate U.S. anti-dumping duties on fresh mushrooms are also expected to be added later this month.
Countervailing duties are used against imports that U.S. authorities determine have been unfairly subsidized. In this case, the U.S. investigation followed a January complaint from the U.S.-based Fresh Mushrooms Fair Trade Coalition, which argued that Canadian tax exemptions gave Canadian mushroom producers an unfair advantage. The coalition also said Canadian mushroom imports had risen in recent years while U.S. domestic consumption was relatively flat.
Canadian mushroom growers reject the finding. Mushrooms Canada CEO Ryan Koeslag said the U.S. approach relies on ordinary agricultural tax treatment, including provincial sales tax exemptions available broadly to farmers, rather than a special benefit for mushroom producers.
“Treating broad-based agricultural tax measures as unfair subsidies is contrary to common sense and unfairly penalizes Canadian mushroom growers for participating in programs available across the agricultural sector in any number of countries,” Koeslag said in a news release.
The industry group has said it does not believe the legal requirements for a countervailable subsidy have been met. Koeslag also told CBC News that agricultural tax exemptions are common in many countries, including the United States, and warned that using them as a basis for duties could invite similar trade cases against farm products on both sides of the border.
U.S. growers welcomed the move. Giorgio Mushroom Co., part of the U.S. coalition behind the complaint, said the duties are an important step. Its CEO, Mark Currie, said American mushroom growers had faced pressure from what he called unfairly subsidized imports that distorted competition and threatened domestic production.
Global Affairs Canada said it was reviewing the details of the Commerce Department’s preliminary determination and would continue taking part in the investigation “to address systemic issues, defend federal programs, and defend the interests of the Canadian mushroom industry.”
Fresh mushroom exports from Canada to the U.S. rose 13 per cent from 2023 to 2024 before falling by nearly four per cent last year, according to Industry Canada data cited by CBC News.
William Pellerin, an international trade lawyer at McMillan LLP who is not involved in the mushroom case, said the preliminary subsidy margin is low, but the case remains active. The Canadian industry could challenge the countervailing duties through the dispute process under CUSMA.
The mushroom duties are separate from the broader tariff measures pursued by U.S. President Donald Trump, including sector-specific duties affecting Canadian steel, aluminum, automobiles and cabinetry. Still, Pellerin said trade cases brought by industry groups could become more common in agriculture, including in Canada and beyond.
For now, the immediate question is how the final stages of the U.S. mushroom investigations unfold — including the expected anti-dumping duties and any Canadian challenge under the North American trade pact.
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