The Canadian pork industry is keeping a close eye on a potential trade war developing between the United States and China.

President Trump recently imposed tariffs on steel and aluminum from China, while China retaliated with tariffs on a number of items including a 25 per cent tariff on pork.

Tyler Fulton of Hams Marketing Services explains the Canadian price is a function of the U.S. market, and when the U.S. price drops, the Canadian price drops by the same amount.

"In the longer term, there may be some implication about a narrowing of the basis between Canadian cash prices and American cash prices which would show up in packer contracts...That relationship between American and Canadian prices will largely stay intact, but it might just end up being slightly more competitive than it would be otherwise because of what would be Canada's comparative advantage over their American counterparts."

Fulton notes at this point, the U.S. and Canadian pork markets remain integrated.