Canadian consumers are likely to face higher prices, even for some Canadian products, as a result of new counter-tariffs of up to 50 per cent on hundreds of U.S. goods worth about $28 billion.
Tariffs are taxes or duties applied for importing certain goods, and as businesses generally face heightened costs, including from these new counter-tariff measures, experts say they may choose to pass them along to consumers by raising sticker prices.
“Eventually, the costs of domestic products are going to start to rise, the cost of doing business for Canadian firms goes up, [and] eventually, some of them are going to have no choice but to raise their own costs, and so we’re going to see the prices of Canadian products go up,” says economics professor Joseph Steinberg at the University of Toronto.
These latest counter-tariff measures come as a response to U.S. President Donald Trump imposing 50 per cent tariffs on hundreds of Canadian products last month, especially those within the dairy, alcohol and automotive sectors.
Although the U.S. tariffs are mainly felt by American businesses and consumers, at least in the near term, some experts say Canada’s counter-tariff measures in response could soon lead to higher prices for Canadian consumers.
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“Food and beverage would be at the top of that list. Ingredients going into food and beverages products, we know dairy products are on the list, both the lists of both countries in that case,” says John Boscariol, partner at McCarthy Tétrault and co-head of the international trade and investment law group.
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“Secondly, I’d look at appliances, home appliances are on that list and we can expect that that could also be an area of a potential expansion to the extent that we’re going to see further retaliation on each side.”
Boscariol also says some agricultural products will likely get hit by these counter-tariffs, which could eventually result in higher prices for food and beverages in Canada.
Among the hundreds of U.S. items facing these new counter-tariffs, there are consumer focused goods ranging from U.S. dairy products to seafood, some furniture products made of wood, beauty and makeup items ranging from perfume to sunscreen, as well as clothing and textiles including men’s suits, t-shirts and dresses, track suits and ski suits, even hazardous material suits and other protective clothing.
Beyond consumer goods hit by these new counter-tariffs, there are also many items Steinberg refers to as “intermediate” goods. This means items that consumers may not regularly see or purchase, but are often required as part of a manufacturing process or supply chain that ultimately could mean higher prices for a wider variety of goods — even if they’re made in Canada.
For example, tariffs of 15 or 25 per cent are being applied to U.S. tower cranes, jacks and hoists, forklift trucks and lawn mowers, rail locomotives, train parts and railway maintenance vehicles, among many others. There are also smaller components that go into making machinery and other equipment, including pumps, compressors, fans, insulating conductors and networking components.
U.S. steel, aluminum and copper products are also being hit with a 50 per cent counter-tariff, up from 25 per cent. This includes steel rods, bars and sheets, along with prefabricated items such as bridges, towers, scaffolding and door and window frames, and aluminum products such as wires, bars, rods and foil.
“These are what I would call ‘intermediate’ inputs that manufacturers and agricultural businesses in Canada need to conduct their business,” says Steinberg.
“You and I don’t buy construction machinery parts or insulated conductors, but the Canadian businesses that operate here, many of them do. And so that’s going to raise the cost of doing business for lots of different types of Canadian firms, manufacturers, and agricultural firms in particular.”
“The longer this goes on, the longer that increased cost of business is kind of with us, the more it’s going to reduce our economy overall.”
Steinberg also says that because Canadian businesses are going to see their costs increase, that also could mean Canadian-made products are likely going to go up in price.
Consumer patriotism has been on the rise in Canada ever since the U.S. launched its trade war with the world last year, and especially with Trump’s repeated threats on Canada’s sovereignty and that it should become the “51st state.”
Canadian products that consumers were prioritizing may become more expensive as a result of these counter-tariffs.
“The products at the grocery store that are made in Canada, their prices are going to go up as a result of these retaliatory tariffs, and eventually what that’s going to do is it’s going to make it harder or at least more costly for Canadians to double down on ‘buying Canadian,” says Steinberg.
But the majority of Canadians may be willing to endure some higher prices amid the latest trade war escalations, as suggested by a new Angus Reid Institute poll released Tuesday, which polled roughly 1,500 Canadian adults from Sept. 3 to Sept 4.
Three-in-five (60 per cent) of respondents said they are willing to stay the course on Canada’s current negotiating strategy even if it means paying 10 or 20 per cent more for household expenses, including groceries and clothing.
“No one wants to see continuing rounds of additional duties or additional trade measures being taken that harm consumers on both sides of the border. It’s counterproductive for consumers, processors and manufacturers, and it’s in the best interests of both parties to now come to the negotiation table and hammer something out,” says Boscariol.
“Consumers are going to be pretty conservative over these next days and weeks when they think about their spending, knowing that all signs point to increasing costs, unfortunately.”
– with files from The Canadian Press.
