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Canada’s %Wheat market has been thrown into chaos by the escalating trade dispute with the neighbouring U.S.

Canadian wheat farmers and exporters are being forced to adjust to higher costs and shifting trade flows as each country slaps import tariffs on the others’ products, including agriculture.

U.S. President Donald Trump officially levied 25% tariffs on most Canadian imports on March 4, though he has since paused many of the duties until April 2.

Canada has maintained its targeted tariffs on about $30 billion worth of U.S. imports, and threatened other retaliatory measures, including limiting fertilizer shipments to America.

The situation has negatively impacted prices for Canadian Western Red Spring (CWRS) wheat, with global demand falling and producers hesitant to sell amid weakening prices.

Some Canadian wheat prices have risen by up to $0.15 per bushel in recent weeks as tariffs and uncertainty roil agriculture markets.

Adding to the current turmoil is the fact that some sellers of Canadian wheat have begun discounting prices to move inventory.

With tariffs affecting North American trade, exporters are now shifting to alternative markets, particularly in the Middle East and Southeast Asia, and away from Canada.

Rising costs for fertilizer, machinery, and transportation are further weighing on the agriculture sector, with farmers putting off investment decisions as their profit margins decline.

Still other Canadian wheat producers are opting to wait it out in hopes of a more favorable market.

Some Canadian wheat producers say they’re holding onto 25% of last year's crop in hopes that the market will eventually revert back to normal.

But as tensions between the U.S. and Canada persist, Canadian wheat prices are expected to remain volatile in the near-term.

Canada is the world’s fifth largest wheat producer after China, India, Russia and the U.S.