A few days after Canada’s retaliatory tariffs on U.S. imports, worth a total of CAD$16.6 billion, came into effect, the question still lingers: What impact will this have on consumers at the cash register?
Global News spoke to several economists and supply chain management experts who supported the assertion that the upper limit for increasing retail prices after the tariffs are applied could be as much as 10 per cent of the original price — or the full cost of the tariff.
“The upper limit is going to be the 10 per cent,” said Walid Hejazi, a professor of economics at the University of Toronto. “Some companies have already said they’re just going to pass the entirety to the customer.”
In response to tariffs on Canadian aluminum and steel exports, the Trudeau government has placed retaliatory tariffs on U.S. steel and aluminum products as well as a 10 per cent tariff on over 80 consumer products.
Because the tariffs will be applied as a “direct percentage,” Marc Wulfraat, the president of supply chain consulting firm MWPVL explained, some retailers may have no choice but to raise prices by a full 10 per cent.
“If it goes up by 10 per cent in duties, technically the retail price should go up by 10 per cent as well. The retailer has to make a percentile of markup in order to keep his business afloat. He’s going be paying more for the goods, therefore he’s going to charge more for the goods,” Wulfraat said.
Keeping in mind that each exporter will individually determine how to absorb these tariffs — whether it be through raising prices, laying off employees, accepting lower profit margins, or otherwise — Global News crunched the numbers to determine what could happen to Canadians’ weekly shopping bills, if the full value of these levies were passed on to the customer.
These estimates are based on regular-priced items, not on sale or clearance.
It’s important to note that these calculations are a rough estimate of the highest amount prices on commonly-purchased products could increase as a result of the tariffs that came into effect on July 1. Depending on how each exporter chooses to absorb the increased fees, the actual amounts may vary.
To determine the average price of American-made coffee in Canada, We found the average retail price of two of Canadians’ favourite American coffee brands: Folgers and Maxwell House. We compared the prices of the Maxwell House Original Roast (920g) (a brand owned by the Kraft-Heinz Company) and the Folgers Classic Roast (920g) from both Walmart Canada and Loblaws online stores, and found the average price to be $9.80.
Potential increase in average coffee price: Up to $0.98.
To determine the average price of American whisky in Canada, Global News compared the LCBO retail prices of Jim Beam White (750 ml), Jack Daniels’ Tennessee Whisky (750 ml) and Wild Turkey 81 Proof Kentucky Straight Bourbon (750 ml). We found that the average price of these three popular whiskies is currently $32.38.
Potential increase in average whisky price: Up to $3.23
Both chocolate “blocks, slabs or bars,” with and without fillings will be subject to a 10 per cent import tariff as of July 1. Therefore, Global News selected one of each — Snickers Bars and Reese’s Peanut Butter Cup Chocolates — to determine the average price chocolate bars could go up for Canadian consumers.
Global compared the prices of a regular Snickers Bar and a pack of Reese’s Peanut Butter Cup Chocolates at both Walmart Canada and Loblaws online stores, and found the average price to be $2.12.
Potential increase in average chocolate bar price: Up to $0.21
Canadians love their strawberry jam, but unfortunately, it’s on the list of dozens of U.S. imports that were hit with a 10 per cent tariff this past Sunday. Global took the price of Smucker’s Strawberry Jam (500 ml) and Kraft Strawberry Jam (500 ml) from Walmart Canada and Loblaws stores, and found the average price of American-made strawberry jam in Canada to be $4.92.
Potential increase in average price of strawberry jam: Up to $0.49
The majority of orange juice imported to Canada comes from Florida, meaning it’s likely subject to a 10 per cent tariff. To determine the average increase Canadians can expect to see on their orange juice, we took the average of the prices of Tropicana 2.63L from both Walmart Canada and Loblaws, which is imported from a manufacturing plant in Bradenton, Fl. While Simply Orange is a Coca-Cola subsidiary brand, it’s largely produced in Coca Cola’s Canadian manufacturing plant in Peterborough, On.
Global News found the average price to be $6.98 for a 2.63-litre bottle of Tropicana Orange juice, a brand owned by PepsiCo.
Potential increase in average price of orange juice: Up to $0.69
While there are several Canadian brands of toilet paper that take up much of the shelf space across the country, a few American brands have managed to become fan favourites north of the border. Global News selected Charmin Ultra Strong, as it was the only American-branded toilet paper available in both Walmart Canada and Loblaws online stores, and found the average price of the product to be $16.33 for a 12-roll package.
Potential increase in average price of toilet paper: Up to $1.63
Salad dressing imported into Canada is primarily exported by one of the largest producers of condiments in the United States, Kraft-Heinz. However, Kaft-Heinz produces many of their products in Canadian manufacturing plants and did not respond to our queries about which products would be impacted by the tariff. Therefore, we used two other brands that have become popular American alternatives over the years, including Newman’s Own, based out of Connecticut and Hidden Valley dressings, manufactured in Oakland, Calif.
To come up with a close estimate of the average price of American salad dressing in Canada, Global News took the prices of Hidden Valley Original Ranch Salad Dressingand Newman’s Own Salad Dressing Balsamic Vinaigrette from both Walmart Canada and Loblaws online stores and found the average price to be $3.85
Potential increase in average price of salad dressing: Up to $0.38
Like salad dressing, ketchup imports are largely dominated by a few major companies, primarily Kraft-Heinz since the company closed its Leamington, On., manufacturing branch a few years ago. Global News compared the price of Heinz Tomato Ketchup (750 ml) from Walmart Canada and Loblaws, and Metro’s private label Selection (750 ml) from Metro locations (which is manufactured in the United States) and found the average price to be $3.38
Potential increase in average price of ketchup: Up to $0.33
If you occasionally add air freshener to your weekly shopping list, you may be impacted by Canada’s retaliatory tariffs on U.S. imports. Major brands such as Glade and Febreze are imported to Canada from U.S. states and could be subject to a 10 per cent duty at the border.
Global News took the prices of Febreze Air Freshener (250g) and Glade Clean Linen (227g) from Walmart Canada and Loblaws and found the average price to be $2.57.
Potential increase in average price of air freshener: Up to $0.25
Mayonnaise is a staple for many Canadian shopping carts. To determine the average price Canadians pay for American mayonnaise, Global took the prices of Kraft Miracle Whip (650 ml), which is imported by Kraft-Heinz Canada, from Walmart Canada and Loblaws’ online stores, and found the average to be $3.98 .
Potential increase in average price of mayonnaise: Up to $0.39
Everyone has seen Campbell’s tomato soup stacked on the shelves at their local grocery store. Unfortunately, Campbell’s, as well as other brands of soup, now fall under a 10 per cent tariff. To determine the general price of American soups in Canada, Global News took the prices of Campbell’s Creamy Tomato Soup (540 ml) and Amy’s Organic Soups (398 ml) from Walmart Canada and Loblaws, and found the average price to be $3.08.
Potential increase in average price of soup: Up to $0.30
According to experts and politicians, the impact will be minimal and won’t be felt for about a month after the tariffs come into effect. While corporations have decried the impact on their bottom lines, Foreign Affairs Minister Chrystia Freeland assured consumers that the direct impact on their shopping bills would be minimal.
“In putting together these lists, the government and our fine officials have worked really hard to find lists that have the minimal impact on Canadians,” Foreign Affairs Minister Chrystia Freeland said recently in testimony before a parliamentary trade committee.
By and large, economists have supported this claim.
“These are not huge numbers. These tariffs are meant to send a message. Every one of these goods is targeted to a state that’s tied to Donald Trump,” Hejazi said. He added however, that while they may not significantly lighten Canadian’s wallets, they represent a strong trade action nonetheless and should be taken seriously.
“It’s really a sad state of affairs that one man can impact the livelihoods of 10 million Canadians.”
Campbell’s also responded to a request for comment, confirming that a 10 per cent tariff on their soups and tomato-based products – in addition to the anticipated increase in pricing for these products’ aluminum and steel packaging – would significantly impact their business.
“With a 10 per cent tariff on soups and broths and tomato products – representing the core of Campbell’s products that are sold in Canada and made from both U.S. and Canadian ingredients – Campbell estimates the economic impact to our Canadian business to be significant,” a spokesperson said.
It’s important to note that corporations whose specific products are not on the list may also face price increases due to the use of aluminum and steel components in their packaging.
“This is in addition to the anticipated increase in costs for imported tin plate steel used almost exclusively for food production, which is Campbell’s single largest procurement expense and accounting for —some 2 billion cans of food annually in North America,” Campbell’s added.
PepsiCo, has also issued several statements outlining the impacts that 25 per cent tariffs on steel imports and 10 per cent tariffs on aluminum imports may have on their in-store prices, and have already begun warning third-party retailers of the coming hikes.
“PepsiCo Beverages Canada has thoroughly reviewed the implications of these proposed actions, and has concluded that we must pass through any cost increase in order to be able to continue to provide the highest quality products, unequaled service, world-class marketing and consistent consumer value,” read a letter from PepsiCo, received by President and co-owner of C-Lovers Fish and Chips Brad MacLeod.
Wulfraat adds that some American companies may use Canadian manufacturing plants to avoid shipping products across the border, which would also exclude them from newly minted tariffs on certain imports. Canadians who are looking to save money on American products included on the list, can check the packaging for information about the manufacturing location. Goods that were manufactured in Canada, even if they’re subject to a tariff at the border, would be spared the extra tax.
However, he suspects that this scenario won’t be common, as the Canadian government has likely used data detailing which products are largely imported from the U.S. to ensure these tariffs put pressure on the Trump administration.
“They’re probably also looking at the data they have in terms of what is being produced where, and what we import the most of. So, if they slapped a tariff on green beans, well, big deal,” said Wulfraat. “Most of the beans we eat are produced in Canada anyway.”
“They must have data that tells them where they should hit in order to maximize the penalty.”
Other companies, however, have already declared that they won’t pass down the additional fees to consumers, including the president of family-run Gielow Pickles Inc. in Lexington, Michigan, who says about 15 per cent of his business activity involves buying and selling cucumbers and pickles with partners in Canada.
He said he’s ready to absorb the tariff increases himself if necessary, but he’s hoping for a quick resolution to the dispute.
“It won’t affect the bottom line for Gielow Pickles — it will come out of my pocket,” said Doug Gielow, whose company motto is “Fifth Generation Pickle People.”
“When my pocket’s empty, I’m going to have to pass it on,” Gielow said. “If you looked through my pocket, you’ll see it isn’t that full.”
-With files from Robyn Crawford and Simon Little.
© 2018 Global News, a division of Corus Entertainment Inc.