The U.S. tariffs on Canadian imports and Canada’s retaliatory tariffs will drive up prices on both sides of the border, but it will take some time before the price increases become noticeable.
In the case of Canada, the prices on some items may rise in as early as a week, while others may take longer, analysts say.
On March 4, U.S. President Donald Trump went ahead with 25 percent tariffs on all Canadian imports, and 10 percent tariffs on Canadian energy imports. Canada in turn is retaliating with 25 percent tariffs on $30 billion worth of American exports to Canada immediately, and on another $125 billion in 21 days.
Barry Prentice, a professor of supply chains at the University of Manitoba, says the time it takes to see the price increases depends on the frequency of consumer purchase and the perishability of products, as they determine the timing of inventory.
“If you put tariffs on fruits and vegetables, it’ll be there in a week to 10 days because that’s how often the shipments come in,” Prentice told The Epoch Times.
Canada’s retaliatory tariffs are being applied on a range of American products, including fruits, plastic products, alcohol, tools, and furniture items.
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Ian Lee, a professor of business at Carleton University, also says that for many everyday retail items, higher prices will arrive in about a week, or two weeks at most, if the tariffs stay in place.
“[Items] consumers buy at the grocery stores and the drug stores and the Canadian Tires and all that stuff, [the price increase on those] is going to flow through really quickly, because they’re fast-moving consumer goods with very high inventory turnover,” Lee said in an interview.
Food items will also be heavily impacted, he said. “We import all of our fruit and vegetables in the winter months because we can’t grow blueberries in the wintertime in Canada.”
Lee says the price jump will take longer for larger industrial items like bulldozers or dump trucks, since inventories that were stockpiled before tariffs took effect could remain for many weeks.
Ian Madsen, senior policy analyst for the Frontier Centre for Public Policy, says even for some longer-storage consumer items, businesses already increased their inventory in expectation of tariff possibilities, delaying when price increases may manifest.
“For instance, all the American whisky and craft beer and American wine that is in liquor stores, if they haven’t been taken off the shelves to prove a point, they will stay at the regular price until they’re replenished with newer ones at a higher price,” Madsen told The Epoch Times.
Almost all provinces have already gone ahead and removed U.S. liquor products from the store shelves. In Alberta, however, where liquor stores are private, there has been no similar move.
Of course, items such as clothes and toys that Canada imports from Asia won’t be affected, Madsen says.
For some sectors which involve integrated supply chains between Canada and the United States and are therefore subject to tariffs on both sides of the border, such as the auto sector, the increases could be more dramatic.
Passing on Costs
Lee says businesses that are in highly competitive markets where customers are very price-sensitive may be forced to absorb some of the costs to be able to stay in business.
He says brand familiarity and greater financial resources leave restaurant chains more capable of absorbing higher costs from the tariffs without substantially raising prices to some extent, but independent ones won’t have that luxury. Lee, who before entering academics used to work at a bank and deal with business loans, says the increased costs will be particularly hard for restaurants, as they already have a very high failure rate.
He also expects “quasi-protected industries” in Canada such as telecoms or airlines to pass on any added costs to consumers.
“About one-third of our entire economy has some form of protection, which reduces the competitiveness, and it also reduces the need to innovate and adjust,” Lee said.
Trump has said the first round of tariffs is meant to elicit more action from Canada and Mexico to stop the flow of illegal immigrants and fentanyl through their borders into the United States. He was initially going to impose the tariffs on Feb. 4, but the leaders of the two countries secured a 30-day pause in exchange for more commitments to secure the border.
Trump is also planning to impose 25 percent tariffs on steel and aluminum imports from all countries including Canada starting on March 12.
Separately, Trump has ordered his officials to review existing trade relations with other countries, and to recommend additional tariffs if any trade pacts are deemed unfair to the United States.
After Canada announced retaliatory tariffs on March 4, saying the U.S. tariffs are uncalled for, Trump said he would increase U.S. tariffs by the same amount. At the same time, U.S. Commerce Secretary Howard Lutnick said that the Trump administration might be willing to meet Canada and Mexico “in the middle some way.”
