Trade spat could cause small price increases in Canada

The Trump tariffs are on Canadian steel and aluminum exported to the U.S. Some of that steel and aluminum goes into consumer products that are sold back to Canada.

One of the biggest U.S. users of Canadian steel, for example, is the auto industry. The Alliance of Automotive Manufacturers warned Thursday that the tariffs would increase the price of cars. In March, the Wall Street Journal offered an estimate of $300 per car.

Canada says it will match Trump’s 25-per-cent tariff on Canadian steel with a 25-percent tariff on various U.S. steel products. And it says it will im- pose a 10-per-cent tariff on 84 other U.S. products. These include foods and drinks (coffee, yogurt, ketchup, quiche, pizza, maple syrup, cucumbers, soup, mustard, mayonnaise, strawberry jam, orange juice, whiskey and more); household items (toilet paper, tablecloths, kitchenware, mattresses, sleeping bags); home appliances (washing machines, refrigerator-freezers); and various other items (power mowers, plywood, pens, beer kegs, among other things).

Karl Littler, vice-president of public affairs at the Retail Council of Canada, noted that the 10-per-cent tariff is not ap- plied on the final retail price but on the lower price companies pay to import the product for sale. Consumers, he said, will see a “4 or 5 per cent” increase in many cases rather than the full 10 per cent.

“Is this desirable? No. Is it bearable? Yes,” he said.

The biggest price challenge, he said, will be in the grocery industry, “because the margins are thin.”

Foreign Affairs Minister Chrystia Freeland said the government deliberately selected products where Canadian substitutes or other non-U.S. substitutes are available to consumers. Consumers will likely see some impact, Littler said, if they are unwilling to switch from particular U.S. products to the Canadian or foreign alternatives.

“If you only drink bourbon,” Littler said, then the whiskey tariff is “obviously going to have a price impact on you.”

Sylvain Charlebois, a Dalhousie University professor who studies food prices, noted that food-price inflation in Canada has been extremely low. He said it is possible the tariffs might give “an excuse to raise prices” for grocers “desperate” for some breathing room. But he said it is only possible to speculate at the moment.