Starting from August 1st, the United States has imposed a high 35% tariff on Canadian goods, with exceptions for products under the United States-Mexico-Canada Agreement (USMCA). This has led to an escalation in the US-Canada trade war.
The US government has retained the exemption rights for trading goods in accordance with the rules of the USMCA. US automakers and other companies with integrated North American supply chains have been lobbying for this exemption, allowing US importers to continue importing most Mexican and Canadian products duty-free.
According to estimates released by the Bank of Canada on July 30th, due to this exemption, the actual tariff rate for US imports of Canadian goods is around 5%. Now, this rate is expected to increase slightly.
Certain key products are being affected by the tariffs. In response to US tariffs, Canada has long been imposing tariffs on billions of dollars worth of US products, from ketchup to washing machines, among others.
Though it is still early to determine the full impact of the tariff war, experts cited by the BBC have indicated that prices of everyday goods in Canada have already risen and are expected to continue rising.
Here are five categories of goods that have already seen price increases in Canada:
Canada has imposed tariffs on US-made washing machines, dryers, refrigerators, and HVAC equipment.
Andreas Schotter, professor of international business at the University of Ontario, explains that due to Trump’s 50% tariff on imported metals, the prices of US steel have increased, leading to higher pricing of these goods.
For Canadians, tariffs have resulted in a 2% average increase in prices for refrigerators and freezers. Data from Statistics Canada shows that in June, prices of dishwashers and washing machines rose by 4.5% compared to the previous year.
Consumers are advised to shop around to avoid paying more.
The automotive industry, with its complex US-Canada supply chain, is particularly hard-hit by US tariffs. A car can cross the US-Canada border up to eight times before final assembly.
The Trump administration has imposed a 25% tariff on all non-US manufactured cars and trucks. Canada has also implemented similar retaliatory tariffs but has provided exemptions to car manufacturers complying with the existing USMCA and those continuing to produce vehicles in Canada.
Car manufacturers are also impacted by US metal tariffs, contributing to the rise in new car prices. Analyst Andrew Barclay from Statistics Canada told the BBC that in June, new car prices surged by over 5%.
He noted, “We also see prices of used cars going up, indicating that people may be unable to afford new cars due to pricing.”
Canada’s tariffs target a variety of US-produced or manufactured foods. The nation’s largest supermarket chain, Loblaw, has started labeling items that have seen price increases due to tariffs with a “T”.
The supermarket has applied this label to nearly 7,500 products, including imported items like tomato sauces, peanut butter, jams, as well as turkey, pasta, and oranges. Prices of these goods have increased due to Canadian retaliatory measures against tariffs.
Michael von Massow, professor of agricultural economics at Guelph University, stated that juice prices have risen by 7.5% compared to last year. Due to the impact of steel and aluminum tariffs, canned soup prices increased by 8%. Most of Canada’s food packaging (such as soup cans) comes from the US.
Barclay from Statistics Canada noted an abnormal increase in clothing prices in June.
Although Canada has imposed tariffs on imported US clothing, he believes that the price hikes are not directly related to these tariffs but reflect a global trend due to ongoing trade tensions.
Major manufacturing centers like China and Vietnam have been heavily affected by high US tariffs, exacerbating uncertainty in these industries.
Prices of clothing and footwear have increased by 2%.
The Canadian home construction industry is concerned that material prices will rise.
Canada has also taken tariff action on carpets, flooring, and tiles. Barclay informed the BBC that maintenance and repair costs for homeowners have slightly increased as a result.
Data from Statistics Canada shows price increases for pipes, plumbing, and steel frame structures.
According to the Canada Mortgage and Housing Corporation (CMHC), provinces hardest hit by tariffs, such as Ontario (partly due to the automotive industry), have seen new housing starts decline by 8% to 26%.
(This article was based on reports from the BBC)