Consumers in Canada could be facing higher prices for some goods if newly announced U.S. tariffs go into effect next month, some experts and businesses say.
This comes after U.S. President Donald Trump threatened new tariffs Monday evening of up to 50 per cent on some Canadian imports that may have otherwise been shielded by terms in the current Canada-United States-Mexico Agreement (CUSMA).
Trump signed three executive orders on Monday, each one using a different justification for the new tariff: the provincial and territorial boycotts on American alcohol products, Canada’s retaliatory tariffs on U.S.-made vehicles and auto parts and quotas on American dairy imports under Canada’s supply management system.
Within each executive order is a detailed annex listing hundreds of other products that could be subject to the 50 per cent tariff. This includes various plants and produce, wood and paper products, clothing and textiles, electronics and components, dog leashes and harnesses, floating docks, swimming and wading pools and even hockey sticks.
In response to the tariff announcement, Prime Minister Mark Carney on Tuesday said “we will look at all options in terms of how we would respond if they do come into effect.”
Those tariffs could go into effect after the deadline on Aug. 19.
When countries like the United States apply tariffs to specific goods from specific countries, it means there is an added cost for American consumers and businesses when they import those products.
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While the tariff is paid by the importing business or individual, those costs typically get absorbed into general prices as businesses pass higher costs onto consumers.
In the case of these new tariff threats, Trump is targeting more goods made in Canada and imported into the U.S., which means Americans importing tariffed Canadian goods have to pay more to do so.
“The sticks that we’re selling for a certain price are now going up in price because of the tariffs,” says Jeffrey De Belle, president and founder of Custom Hockey Sticks.
“It almost feels like a bit of a shot at us Canadians and the hockey people.”
When faced with these additional costs, businesses must make a difficult decision. They must either absorb the added fee, which can eat into profits, reduce costs elsewhere to offset those costs, or pass all or a portion of those added fees onto the consumer.
This means U.S. consumers could ultimately be paying higher prices for goods made in Canada as the result of new tariffs.
“It’s going to be tough because prices are just going to skyrocket,” says De Belle.
“We’re basically going to put a line item 50 per cent tariff on our website to cover these costs and, are they going to buy still? We’ll see.”
Even if the immediate cost increases are felt in the U.S., experts say Canadians could still feel effects.
John Boscariol, a partner in the international trade and investment law group at McCarthy Tétrault LLP, says there are two scenarios where Canadians could see higher prices if the tariffs go through in 29 days.
“As these tariffs are imposed on products going into the United States, some of these products on the list go into manufacturing in the United States,” he says.
“And so U.S. products become more expensive as a result. And to the extent that Canadians are importing those U.S. products into Canada, we could see price increases there.”
This means Canadians could face higher prices from products that cross the U.S. border multiple times and get hit with these new duties.
For example, one of the products targeted by Trump’s new 50 per cent tariff threats is plywood and wood veneer sheets.
If a U.S. furniture manufacturer imported these products from Canada, then they would face additional duties from those tariff policies.
Once the wood is manufactured into a finished product, like a cabinet, if a Canadian customer wants to order it, they may face a higher price compared to before the tariffs. That’s because the manufacturer had to pay for tariffs on their end first, and may have passed those additional costs onto the customer.
Boscariol says Canadians could also pay higher prices if Canada responds to this latest threat with more counter-tariffs.
“The second potential impact is it really depends on how Canada responds to this latest threat. If there is a push on the Canadian side to reimpose retaliatory tariffs, it will make products more expensive for Canadians.
With a file from Global News’ Adriana Fallico
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