Canada’s retaliatory measures slap tariffs on Heinz ketchup amid trade moves
Tomato products among targeted items
Pittsburgh Post-Gazette
Food giant Kraft Heinz Co. did pretty well under the U.S. tax overhaul, but the condiments could start flying in the global trade war that has erupted in recent months.
Canada’s countermeasures to American trade moves call for, among other things, putting a 10 percent tariff on “tomato ketchup and other tomato sauces,” according to the official list from the Canadian Department of Finance.
That’s lower than the 25 percent Canadian tariffs on many U.S. steel products scheduled to go into effect July 1, but still unwelcome to the food company that claims dual headquarters in Pittsburgh and Chicago.
Kraft Heinz makes its signature Heinz ketchup in Ohio among other places.
A company spokesman confirmed this week that ketchup sold in Canada is made in the United States.
“As a global food company, Kraft Heinz opposes trade policies that impose taxes or tariffs on our products,” said Michael Mullen, senior vice president of corporate and government affairs.
Canada’s list of products targeted for the new 10 percent tariffs also include yogurt (although the neighbors to the north spell it “yogourt”); prepared mustard; pizza and quiche; and mayonnaise, salad dressing, mixed condiments and mixed seasonings.
For good measure, Canadians threw in a few products on the tariff list that one wouldn’t normally think would be exported to Canada — like maple syrup and beer kegs made of iron or steel.
The first shots in this particular global trade war were fired by President Donald Trump, who earlier this year announced widespread tariffs on steel and aluminum — and declined to spare allies such as Canada and Europe. He has said that current trade agreements do not benefit U.S. industries.
In the midst of the tussles that also have included China, negotiations have been underway to make changes to the North American Free Trade Agreement.
“NAFTA has been in place for more than 20 years and we have developed supply chains that run across North America,” said Mr. Mullen at Kraft Heinz. “We are opposed to any change that impacts our ability to seamlessly move our products across these borders.”
Pittsburgh’s H.J. Heinz Co., which became Kraft Heinz after the acquisition in 2015 of the Kraft Foods Group, has long been a major supplier in the Canadian food market.
And it has dominated the ketchup supply there.
Kraft Heinz ketchup last year accounted for more than 76 percent of the Canadian market, according to market research provider Euromonitor International, which is based in London but has offices globally.
That’s even more than in the U.S., where Euromonitor data shows the company has about 66 percent of the ketchup market.
Last year, Kraft Heinz reported more than $2 billion in net sales in Canada. The company’s total sales exceeded $26 billion.
For more than a century, Heinz operated a plant in Leamington, Ontario. The plant employed hundreds a few years ago when Heinz announced plans to pull out.
The town that supplied the workforce to the plant claimed the nickname “Tomato Capital of Canada.”
Moving out made the U.S. company much less popular in Canada, and there were even calls to boycott Heinz ketchup. Competing condiment maker French’s has taken advantage of the spat by moving to try to win over Canadians and making inroads into the ketchup market.
Ketchup has been caught in trade disputes before, including almost a decade ago when Mexico used retaliatory tariffs on a long list of products to protest the cancellation of a program meant to allow Mexican trucks to operate in the U.S.
While Kraft Heinz hasn’t been happy about governments battling over trade, the food giant did benefit from earlier government policy changes.
In reporting its 2017 results earlier this year, the company said the U.S. tax cuts had allowed it to put $300 million into strategic investments, more than $800 million into capital expenditures and $1.3 billion toward pre-funding post-retirement benefit plans.