U.S. tariffs will push up price of food in Canada first: analyst

An extended trade war with the United States will have an impact on what you pay for a wide range of goods, but one of the most immediate effects will be on food as Canada’s retaliatory tariffs push up the price of U.S. imports.

However, one analyst believes Ottawa’s two-stage approach to the levies on American goods will mitigate the impact on Canadians.

“In Canada, I do think the two-pronged approach will soften the blow for consumers,” said Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University. “The second wave of tariffs in 21 days will be more impactful.” 

However, Charlebois adds that shoppers are already finding alternatives at the grocery store and will continue to search for cheaper, non-American goods.

“There are substitutes out there for anything impacted by tariffs. The other thing we are noticing is that demand for American products is shrinking.”

Some produce wholesalers predict consumers will see a spike in certain products very quickly.

“Some things like celery, like broccoli, like cauliflower and the lettuces are predominantly coming from the United States at this time of the year,” said Larry Davidson, who runs North American Produce in the Greater Toronto Area.

“Some of that stuff will be immediately, potentially, out of reach for consumers. You’re looking at a dollar or a dollar-and-a-half a pound, maybe more, depending on the item,” he told CityNews.

Beyond the potentially crippling hit to the country’s auto sector, the trade war is also set to push up the prices of new vehicles in Canada by hundreds or even thousands of dollars within months, depending on final U.S. tariffs on steel and aluminum.

“When you stack on those extra tariffs, that’s quickly where you get to the thousands-dollars-plus of what new vehicle prices are potentially going to go up by,” said BMO economist Erik Johnson.

He adds that other impacts may be less direct but will still add up.

“The company that I’m ultimately buying a box of cereal from or a piece of furniture from, or even the condo that I’m renting or going to move into, parts of that condo will have components that were made in the United States. That is where we can see the broader effects of this,” said Johnson.

Meanwhile, Charlebois suggests the effects of the trade war could be compounded if the Canadian dollar crashes.

“It’s not going to help. A lot of things we import from all over the world, not just America. That could actually end up costing us more as consumers, and that is beyond the control of any governments.”

With files from Shilpa Downton and Shauna Hunt.