The looming threat of retaliatory tariffs between Canada and the United States has raised concerns about the impact on consumers. Experts predict price increases across various sectors, particularly for food and gasoline, with the Canadian dollar also expected to weaken. The duration of these price pressures will depend on the length of the trade war and the resilience of supply chains.
The potential for retaliatory tariffs between Canada and the United States has sparked concerns about the immediate impact on consumers. David Dienesch, CEO of Allianz Trade in Canada , warned that oil and gas tariffs could lead to a US gasoline price increase of $0.75 per gallon, subsequently affecting transportation costs for goods entering Canada from the US. Companies might be forced to pass these increased costs onto consumers, particularly for products with lower profit margins.
President Trump hinted at potential tariffs on oil, stating that the decision would be based on oil prices and fair treatment from Canada.\Economists predict that Canada's retaliatory tariffs could also contribute to price increases. Tu Nguyen, an economist at RSM Canada, pointed out that the impact would vary depending on the specific goods targeted, the availability of Canadian substitutes, and the extent to which tariffs are passed on to consumers. Sylvanus Afesorgbor, a professor of agri-food trade and policy at the University of Guelph, emphasized that Canadians would feel the effects of tariffs on grocery store shelves quickly, as Canada imports approximately 60% of its food from the US. He particularly highlighted the potential for price increases in fruits, vegetables, and prepared foods, which are heavily reliant on US imports. \Afesorgbor explained that Canada exports grains to the US, and if these grains were subjected to tariffs, US food producers would face higher costs when re-exporting processed food back to Canada. This could result in further tariffs being imposed on these goods as they cross the Canadian border. While some products like cereal might not see immediate price hikes due to existing stockpiles, Afesorgbor warned that the price of meat and dairy products could also increase due to the import of live animals from the US. Experts emphasize that the interconnected nature of Canada and US supply chains means that any tariffs could trigger inflationary pressures in both economies. Erik Johnson, senior economist at BMO Capital Markets, predicts an immediate weakening of the Canadian dollar, making it more expensive for Canadians to purchase directly from US sellers. He suggests that Canadians seeking used cars from the US market will face challenges in finding good deals due to the unfavorable exchange rate. Johnson highlighted the complexity and duration of the potential price impact, stating that sustained price rises would depend on the length of the trade war between Ottawa and Washington. He emphasized that the price impact could range from a one-time increase to gradual price adjustments over time.
TARIFFS CANADA UNITED STATES ECONOMY INFLATION CONSUMER PRICES TRADE WAR SUPPLY CHAINS
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