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Canadians face looming cost increase for U.S. products

June 26th, 2018  |  Canadian Business

Canadians are facing higher prices for a growing list of consumer goods after the government announced it would be fighting back against tariffs laid out by U.S. President Donald Trump. The Canadian government are set to place retaliatory tariffs, beginning July 1, on dozens of U.S. product, which will see Canadian shoppers footing the rising bill.

The news follows Trump announcing his own steel and aluminum tariffs, which kicked in on June 1, something that Prime Minister Justin Trudeau described as a “turning point in the Canada-U.S. relationship”.

Not only will the Canadian tariffs be placed on select steel and aluminum goods, including washing machines, boats and appliances, it will also affect an broad mix of around 120 other consumer goods such as coffee, ketchup and toilet paper. Steel and aluminum goods will be liable for a 25% tariff, meanwhile other goods with suffer from a 10% tariff. Overall, the goods add up to $16.6 billion worth of U.S. imports.

On May 31 Foreign Affairs Minister Chrystia Freeland stated that the U.S. consumer goods were chosen because alternative products could "be easily sourced from Canadian companies or non-U.S. trade partners." The list is not final, and the public have been invited to share their thoughts about the movement with Ottawa.

However, it isn’t just the Canadian consumer who is expected to be left out of pocket after the tariffs take effect. Many Canadian businesses are also nervously anticipating the tariff, with worries about their own sales dropping.

"We're wondering how we're going to defend against this," Terry Mertz, an accountant at Parker Marine, a boat dealer based in Courtenay, B.C, told CBC News. According to the National Marine Manufacturers association, 65% of boats sold in Canada last year came from south of the border, and there simply aren’t enough domestic manufacturers to supply the entire national market. Mertz worries that the coming tariffs and the resulting price increase will scare customers away.

Other much-loved products include ketchup and coffee, items which some customers may already be too attached to a name brand to consider switching out for an alternative.  "There are certain types of goods where the argument of substitutability doesn't hold true, or at least is exceedingly difficult," said Karl Littler, the Retail Council of Canada's vice-president of public affairs. "If you are insistent that you want the Verona blend from Starbucks and you will not accept a substitute, then all that's going to happen is you're going to end up paying more.”