Tariffs and ‘countermeasures’: What consumers on both sides of the border could pay more for
This week, U.S. President Donald Trump announced he will slap steep tariffs on Canadian aluminum and steel and in retaliation, Canada vowed to impose a slew of hefty countermeasures designed to hit Trump where it hurts.
But how much will those measures hurt Canadian and American consumers?
On Thursday, Trump said he would not renew temporary exemptions for Canada and several other American allies from import duties of 25 per cent on steel and 10 per cent on aluminum that were first imposed in March and go into effect immediately.
Hours later, Prime Minister Justin Trudeau and Foreign Affairs Minister Chrystia Freeland announced $16.6 billion worth of Canadian tariffs that will be applied on July 1.
Those Canadian tariffs target everything from whisky to washing machines and peanut butter to pedicure products — in addition to steel and aluminum.
“This is $16.6 billion of retaliation,” Freeland said Thursday. “This is the strongest trade action Canada has taken in the post-war era. This is a very strong response, it is a proportionate response, it is perfectly reciprocal. This is a very strong Canadian action in response to a very bad U.S. decision.”
Here’s what consumers on both sides of the border may potentially pay more for as a result.
Essentially, consumers can expect to pay a little more for American-made products largely made of steel and aluminum.
Walid Hejazi, associate professor of international business at the University of Toronto’s Rotman School of Management, suggests that Canadians will likely see a bump in the price of U.S.-made vehicles.
“So, now what will happen is that cars that are not made in the U.S. will be less expensive,” Hejazi said. “The steel and aluminum industry in the U.S., those people are unbelievably happy. Every other industry that uses steel, they are infuriated.”
“So, now everything in the U.S. that uses steel, those prices are going up and that’s going to hurt the car industry,” Hejazi said.
Unifor, which represents Canadian auto industry employees, said the tariffs against Canada will hurt the auto industry on both sides of the border, resulting in higher costs for consumers.
“Canada must take swift action to defend Canadian industries & workers for unjust attacks by the U.S.,” Unifor said in a tweet after the tariffs were announced Thursday.
“The auto supply chain is completely intertwined. A cost increase of this magnitude will drive consumers directly into the arms of Japanese carmakers,” Unifor national president Jerry Dias said in a statement in March when the tariffs were first announced.
In March, U.S.-based National Marine Manufacturers (NMMA) also released a statement saying aluminum tariffs will make boat production more expensive.
“While these tariffs are meant to protect American manufacturing, they do just the opposite. U.S. manufacturers, like those in our industry, which use American-made aluminum, depend on a competitive global market and fair pricing,” NMMA president Thom Dammrich said in the release.
“The implementation of these aluminum tariffs, in combination with the additional, even larger tariffs on aluminum sheet proposed by the Department of Commerce, will drive up the costs of the aluminum used to manufacture more than 111,000 aluminum boats, such as pontoons and fishing boats, which make up 43 per cent of new powerboat sales each year.”
Polaris, which manufactures snowmobiles and all-terrain vehicles, said in March it could expect a bump in cost of about one per cent. Chief executive officer Scott Wine told Reuters that the company spends more than $300 million annually on steel and aluminum and Polaris would have to “mitigate the inevitable price increases from our domestic steel suppliers” as a result of the tariffs.
Products packaged in aluminum, such as beer, could cost more for Canadians after the tariffs are implemented.
In February, a letter released jointly by several organizations whose products are packaged in aluminum — including PepsiCo, Coca-Cola, the Beer Institute, etc. — warned that tariffs would make it more expensive to brew and package beer.
The letter claimed that a 10 per cent tariff on aluminum would cost beer and beverage producers $256.3 million, a 20 per cent tariff would cost $512.5 million and a 30 per cent tariff would run $768.8 million.
Canada’s countermeasures on July 1
While Trump’s tariffs target steel and aluminum, the Canadian tariffs are extensive.
Forty-four types of steel and steel alloy products will be hit with the 25 per cent tariff.
As well, 84 types of other products are being slapped with the 10 per cent tariff.
Which goods are included on that list?
Yogurt, coffee, prepared meals like frozen pizza and dinners, detergent, whiskies, beer, lawnmowers, heaters, sleeping bags, mattresses, and a range of office supplies including felt-tip pens.
Also on the list of 10 per cent tariffs are non-household dishwashing machines, combined fridge-freezers, household laundry machines, sailboats, motorboats, chocolate, maple syrup, licorice, toffee, nut butters, jams, orange juice, cucumbers and gherkins, soy sauce, ketchup, mustard, mayonnaise, flavoured water, shaving products, hair lacquers, manicure and pedicure products, and soups.
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All those tariffs will work by imposing a levy on manufacturers when they ship their goods north of the border and in turn, those companies will likely pass on those costs to consumers.
That could come in the form of price hikes on the goods targeted by the tariffs.
But while consumers in Canada might expect to pay more for a crate of La Croix or a jar of Kraft peanut butter, officials stressed on Thursday they took care to curate a list of targets that have available alternatives.
“We’ve looked to choose goods for which there is a Canadian alternative,” said Freeland on Thursday, “or an alternative produced by a country which is not the United States.”
That means that if your favourite brand of ketchup ends up costing more on July 1, you can pick another brand (either a Canadian brand or one from a country that is not the United States) and expect to still pay the regular price.
Essentially, that boils down to some simple pocketbook advice.
Trump may be promoting a policy of Buy American but for Canadian consumers concerned about tariff-related price hikes, the best advice as of July 1 may be to do exactly the opposite.
–with files from Katie Dangerfield
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