The Ontario horse racing industry is warning it could be a major casualty in the trade war between the United States and Canada, and the fear is particularly palpable among horse breeders already struggling with rising costs due to inflation.
Arika Everatt-Meeuse, the second-generation owner of her family’s Shannondoe Farm Thoroughbred breeding operation near St. Thomas, Ont., believes blanket 25 per cent tariffs would end the Ontario horse racing industry that supports more than 23,000 full-time equivalent jobs in the province, contributes $1.9 billion to the province’s gross domestic product (GDP) annually and is responsible for more than $327 million in yearly Ontario tax revenue. Breeders and other horsepeople are responsible for 80 per cent of that GDP contribution.
“A 25 per cent tariff on the product we are raising will be the end of the Thoroughbred business in Ontario,” Everatt-Meeuse said via text message. “We have to export and appeal to U.S. buyers to survive.”
Currently, U.S. tariffs are due to be applied to Canadian goods on April 2. However, there is uncertainty about but what will or won’t happen.
In Canada, the federal government is ramping up a response with reciprocal tariffs on some goods. What’s not clear yet is if the horse racing industry will be included in Canadian tariffs. The federal government is currently taking public input until March 25 about proposed countermeasures to U.S. tariffs. Industry leaders are strongly encouraged to submit input to better inform the government and request an exemption to Canadian tariffs for purebred breeding and racing animals. The form can be accessed by clicking here.
Even if Canada does not apply reciprocal tariffs on horses connected to racing, Canadian breeders are already facing a devastating financial hit from proposed U.S. tariffs of 25 per cent.
$4.5 Million In Tariffs On Canadian Yearlings
In 2024, 157 Canadian Thoroughbred yearlings were sold at U.S. auctions totalling more than $7.6 million USD in sales. On the Standardbred side, Canadian breeders sold 110 yearlings at U.S. sales in 2024 for total sales of approximately $4.8 million USD. Combining Thoroughbreds and Standardbreds, Canadians sold 268 yearlings in the U.S. in 2024 for total sales of $12.4 million USD.
Two major concerns of how tariffs might be applied and how border agents determine the true value of those horses remain unclear. But, if breeders are forced to post a bond at the border on horses produced in Canada — regardless of whether the stallion is Canadian or U.S. — and then pay a 25 per cent tariff based on the eventual auction sale price of those horses sold in the U.S., that means those 268 yearlings would have been subjected to total U.S. tariffs of $3.1 million USD in 2024. At current exchange rates, that’s about $4.5 million.
Also, yearlings are only a fraction of the horses being sold in the U.S. by Canadians. Weanlings, racehorses and broodmares are also routinely sold in the U.S. The tariff figure, when you factor in all horses connected to the horse racing industry, would be significantly higher than $4.5 million.
It's not as simple as saying those horses should be sold in Canada. Of those 2024 yearlings sold in the U.S. by Canadian breeders, more than 80 per cent of Thoroughbreds and 56 per cent of Standardbreds were sired by stallions standing in the U.S. That means they were made for the U.S. market and bring far more money selling in the U.S. where the horse-buying contingent is significantly larger. Canadian breeders already struggle with thin margins and high inflation and need to make every dollar to survive.
Horse Racing Has Been Borderless For Decades
The Ontario horse racing industry, much like the auto sector, is intertwined with its U.S. counterparts. In fact, horse racing has long been essentially borderless around the world. This is particularly true between Canada and the U.S. Horses routinely cross the border to breed and race and have done so, tariff free, for decades.
“The horse industry knows no political or economic borders,” said David Anderson, president of the both the Canadian Thoroughbred Horse Society’s (CTHS) national and Ontario divisions and owner of the Anderson Farms breeding operation in St. Thomas, Ont., started by his father. “We are all driven by our shared passion for the sport and the industry we’ve built together. Implementing economic sanctions will only weaken the foundation we’ve worked so hard to establish. Genetic pools are tight enough for breeders as it is. We need to continually introduce new bloodlines from all corners of the world in order to evolve the breeds.”
Less than an hour east of St. Thomas in Embro, Ont., Tammy McNiven is convinced tariffs would close her family’s Standardbred breeding operation Twinbrook Farms. Standardbred rules allow a stallion to be located in one jurisdiction and still breed mares in another via shipped semen and artificial insemination. Twinbrook predominantly breeds its mares to U.S.-based stallions and raises the foals in Ontario. When foals turn one and become yearlings, Twinbrook sells those horses at auction in the U,S.
McNiven said tariffs from the U.S. side would be devastating, but reciprocal tariffs from the Canadian government would completely kill her family’s business.
“If we start paying tariffs on [horse] semen coming into Canada and our yearlings going out of Canada, we're done, because if the Americans have to pay [tariffs] on the stud fee, they'll stop breeding in Ontario,” said McNiven. “People like us, who [have] 95 per cent American [bred horses], because there's not enough people to buy horses in Ontario, it'll put us out of business.”
Ontario is home to 10,000 horses connected to the horse racing industry. Blanket tariffs could place many horses at risk if those that care for them don’t have the financial means to do so.
Breeders Worry Politicians Don't Understand Horse Racing Economics
Those that breed racehorses fear politicians and border officials fail to understand both how to properly value horses and how the economics of the industry works.
Early indications from when U.S. tariffs were briefly in place at the beginning of March before being paused show U.S. border agents could apply 25 per cent fees to shipped semen crossing the border and that fee will be based on the stud fee — the amount charged to breed to that stallion if, and only if, there is a live foal a year later.
For example, Standardbred stallion Bulldog Hanover, the fastest horse in harness racing history, stands at Seelster Farms in Lucan, Ont. His stud fee is $15,000 USD. A 25 per cent tariff applied to his semen would be an added cost of $3,750 USD to U.S. breeders each and every time his semen crosses the border to breed a mare based in the U.S. It takes, on average, two shipments of semen to successfully impregnate a mare, but the number of shipments could be as high as nine. So, using three shipments as a slightly-above-average example, if tariffs are charged on each shipment, the total tariff fee for the owner of a U.S. mare that requires three shipments of Bulldog Hanover semen to produce a live foal would be $11,250 USD ($3,750 x3), raising the cost to breed to him by 75 per cent to $26,250 USD (stud fee of $15,000 + $11,250 in tariffs).
In 2024, combining the numbers from Ontario’s three biggest Standardbred farms that stand stallions — Winbak Farm, Seelster Farms and Tara Hills Stud — the number of U.S. clients each farm has ranges from 23 per cent to as high as 55 per cent depending on the stallion. That means significant U.S. tariffs already threaten the loss of between a quarter and half of those farms’ customers almost overnight.
Value Of Semen Can't Be Based On Stud Fee
“You cannot value semen according to the stud fee,” said Ann Straatman, the reproduction manager at Seelster, a farm owned by her family and started by her father and his siblings. “If you want to tariff the boxes of semen going across the border, there's definitely goods and services crossing the border which makes it possible to transfer Canadian stallion semen to the mare residing in the U.S. The value is approximately $100 Canadian — $45 for the packaging, $55 for the process and handling. And there's an invoice that goes with that… We would understand that kind of a tariff, but it's not fair or agreeable to charge a tariff on transported semen from Canada.
“The semen itself is worthless, and it's never sold… Those breeders receiving the stallion semen are not charged for it [on delivery]. Mares often require multiple shipments of semen. The service fee is only due when the mare produces a live foal, and only approximately 65 per cent of mares bred by artificial insemination actually produce a live foal which would trigger a service fee. So, to tariff 100 per cent of the service fee every time is impractical and unfair.
“They don't understand that our entire business is built, the breeding part, on 11 months ahead, and then, when you're selling yearlings, 18 months ahead. So, it's a long-term plan into the future that people are going to think twice about.”
How horses will be valued at the border is a major concern. Everatt-Meeuse said it’s a complicated issue.
“When will the tariff be imposed?” she asked. “When we somehow prove the value of the horse at border crossing or will they track and add additional tariffs at the time of sale, say for fall yearlings? For Ontario-bred horses already in the U.S. prior to the implementation of the tariffs, could they catch up to the horse as it sells and, if so, who is paying it then? All that confusion will further deter U.S. buyers from our [Ontario] product.”
Breeders Work Years In Advance To Produce Product
McNiven said changing to an entirely Canadian horse breeding operation simply won’t work.
“To put all our eggs in one basket in Ontario, there’s a ceiling of the amount of money being spent in Ontario,” said McNiven. “It’s not sustainable to run a breeding farm in Ontario right now on the averages that we get. That’s why we’re diversified on both sides of the border.”
Even if Twinbrook did switch to only breeding horses in Canada and selling them in Canada, it would take upwards of five years to make the transformation. It currently has many years of U.S.-bred horses in the pipeline.
“It'll take us three to five years to switch our business model because of everything that's in line – the babies on the ground, the pregnancies, the yearling crop,” said McNiven.
Then there are the ancillary businesses — the vets, the people that grow hay or make equipment, the truck and trailer dealers, the coffee shops and restaurants and hundreds of other businesses supported by horsepeople that earn their living from the horse racing industry on both sides of the border.
Genesse Valley Equine Clinic, located just across the border in Batavia, New York, has been shipping Standardbred semen between the U.S. and Canada for 34 years. Jacquie Valder-Phillips, who does the shipping, said tariffs on shipped semen would deal a harsh blow to their business.
“It’s been a good run, but maybe this is it,” said Valder-Phillips. “I hope not. I’ve met a lot of nice people. It's really been a great business. It's seasonal. But I feel for some farms, like Tara Hills, probably 50 per cent of his clients are U.S. So, what’s going to happen to him? I also ship for Winbak and Seelster. They will certainly be majorly impacted.”
It’s just yet another indication that tariffs will be damaging on both sides of the border.
“I don’t see horses as Canadian or American, I see them as North American, part of a unified effort to strengthen our breeding and racing programs,” said Anderson. “These barriers won’t just cripple the industry in Canada, they will also have significant economic consequences for our partners and friends in the U.S. I truly hope our countries can find a reasonable solution for the future of our sport.”
David Heffering, owner of Tara Hills Stud in Port Perry, Ont., started by his father, said action is needed by people in the industry on both sides of the border.
“I don’t like seeing Americans and Canadians against one another,” said Heffering. “What I really don’t like is pitting Canadian horse owners against American horse owners. We need to all unify on both sides.
“Horsemen need to be reaching out on both sides… It should be a last resort if we have to do reciprocal tariffs, but what we should all be working on is saying, ‘No, there should be no tariffs on any product coming up on both sides.’”
Canadian Farms Can't Survive 25 Per Cent Tariffs
Heffering said his farm cannot survive 25 per cent tariffs.
“We would all like to have a five to 10 per cent margin, but that’s hard to achieve,” he said. “How can we expect to pay 25 per cent and survive?”
American Joe Thomson has a massive investment in breeding Standardbred horses on both sides of the border. He operates Winbak Farm that has locations in Ontario, New York, Pennsylvania, Maryland and Delaware. Winbak’s Ontario operation in Inglewood is home to 10 Standardbred stallions.
“My biggest concerns are that the two leaders [of the U.S. and Canada] can’t get together on fair and equitable terms on the tariffs,” Thomson said via text message. “The impact will be terrible if [tariffs] apply to semen, yearlings and racehorses. Too often, I think the politicians don’t understand the horse terminology, or how the industry works. Right now, I think there’s too much noise for anyone to listen, much less get anything positively accomplished on tariffs for us. Plus, other than President Trump I am not sure who you would talk to. Did I mention it is a mess?”
What If Tariffs Apply To Horses Crossing The Border To Race?
Thomson mentioned racehorses. There’s a rising concern that tariffs will also apply to horses travelling across the border to race. For many decades, horses have travelled back and forth to race, tariff free, just like a hockey team going to another country to compete.
Veterinarian and Standardbred trainer Dr. Ian Moore said it’s going to be extremely difficult for border agents to determine a horse’s country of origin. He is currently training young horses in Florida that will soon come to his main base in Ontario for the racing season. Those horses have a mixture of Canadian and U.S. breeding and owners from both countries — some purchased in the U.S., some in Canada.
“All of this would get very confusing for CBSA [Canadian Border Service Agency] officials very quickly and in my case would heavily penalize Canadian owners that have bought young U.S. horses last year to train into future racehorses,” Moore wrote in an email to politicians that he shared.
First of all, Moore said tariffs should not apply to horses purchased before those tariffs go into effect, but also, he’s worried tariffs will slow or completely eliminate horses travelling to Canada to race. That will impact the number of horses in each race, which decreases betting and eventually leads to lower purses (prize money) that sustains the purchase and training of horses. It’s a concerning downward spiral.
“I would not be surprised if the vast majority of American trainers with American-owned horses don't go near the border if this goes into play,” said Dr. Moore.
Anderson, a part-owner of Canadian-sired Breeders’ Cup winner Moira, said had 25 per cent tariffs been in place in 2024, her owners would have been hit with more than $1 million in tariffs.
Pennsylvania-based Standardbred trainer Ron Burke operates the largest stable in harness racing. He routinely races in both countries, but said tariffs just might have him keep his horses in the U.S.
“It’s going to be a serious issue,” Burke said via text message. “I have no desire to post a bond to race my horses. As with everything else, we will cross that bridge when we have to, but I really don’t think we would want to come [to Canada to race]. Also, how do you value the horse?”
That point was mentioned by many — is a racehorse’s worth what it cost to produce that horse, what it originally sold for, what it has earned on the track, what it could be sold for or something else? It’s not clear.
For an industry that has endured inflation that has greatly increased the operating and breeding costs – which came shortly after rebounding from widespread closures and loss of revenue caused by the COVID-19 pandemic – tariffs represent the greatest concern to Ontario’s horse racing community since the province cancelled the successful Slots at Racetracks Program a little more than 10 years ago.
“It feels like when they pulled the slots [at racetracks program in Ontario] and I was in such turmoil for weeks,” said McNiven. “It feels the same to me, except I’m older and I’m more fragile.”
(Ontario Racing)