Effects of U.S. trade war hit canned goods

July 31st, 2018  |  Canadian Business

Higher prices are set to hit our shelves soon as manufacturers of canned products begin to feel the strain of the trade war with the U.S. Beverage giant, PepsiCO Beverages Canada recently advised that prices of its products-most notably canned drinks-will raise about a penny per can.

The trade-war, which was implemented initially by the current Trump administration in the U.S., sees the cost of aluminium and other tariffs being forwarded onto retailers, with consumers picking up the final cost. The new tariffs saw a 25%  tax on steel, and a 10% tax on aluminium. It further lead to an act of retaliation from the Canadian government, who put their own tariffs in place on a range of products, including aluminium cans.

Although 90% of Pepsi products consumed in Canada are made at one of its six factories in the country, the supply chain crosses the border multiple times, and that’s where the taxes really hold their grip. Whether the cost is passed onto the consumer after the price hike is really up to the individual retailer.

It is expected that similar increases will affect multiple producers of canned products, but it is thought that canned good will be the last thing retailers decide to add customer cost onto. "Demand just isn't there,"  Sylvain Charlebois, a professor in food distribution and policy at Dalhousie University, told CBC.  "A lot of these products are loss leaders, products sold at a loss to attract consumers into a store.”

While a 10% increase in aluminium might see a hike of up to 3% once it hits retailers, thanks to the long-life of canned goods, grocery chains will likely have more leeway on their pricing.