A fresh round of U.S. President Donald Trump’s tariffs is set to hit Canada this week and experts are warning that Canadians will feel the pinch almost immediately on some items.
Trump has announced plans for “reciprocal” tariffs on foreign goods entering the country from countries with tariffs or trade measures that he says impede the flow of American goods into that country.
The reciprocal tariffs will be on top of sweeping 25 per cent tariffs put on Canada and Mexico at the start of March, as well as the 25 per cent steel and aluminum tariffs earlier this month.
The “reciprocal” tariffs don’t name Canada or Mexico specifically but would apply to all of America’s trading partners with a broad range of trade measures. These tariffs, along with a tariff on all foreign-made vehicle imports into the United States, will go into effect Wednesday.
Tu Nguyen, economist at RSM Canada, said, “It remains uncertain exactly which tariffs will come into effect April 2, and what Canada’s response will be.”
“However, it is likely there will be more tariffs from the U.S. on Canadian imports as well as retaliatory measures from the Canadian government on U.S. imports,” Nguyen said.
So where will you feel the impact?
Mike von Massow, food economist at the University of Guelph, said the impact of Canada’s expected retaliatory tariffs on the U.S. would be “immediate, but not substantial.”
Ottawa’s list of retaliatory tariffs has been designed to minimize the damage that Canadians will bear.
“It’s your ability or your willingness to substitute that will really affect your ability to, to minimize the impact of these retaliatory tariffs,” he said.
Nguyen said, “Households will likely see prices of groceries rise first, especially on perishable items as it is not possible for business to stock up in advance.”
For example, von Massow said, consumers who have a taste for Florida oranges will have a tougher time at the grocery aisle compared to those who are willing to substitute it for Brazilian orange juice or South African oranges.
“If you are stuck on Wisconsin cheddar, that price will probably go up immediately. If you just want (any) cheddar cheese, there should be an abundance of cheddar cheese that won’ t go up in price the same,” he said.
Over half of Canada’s food imports come from the United States, particularly fresh fruits and vegetables.
“This time of year, the vast majority of our leafy greens are coming from the U.S. So if we put tariffs on leafy greens, your lunch salad or the lettuce on your sandwich might get more expensive,” he said, adding that some of that pressure could ease in the summer months as vegetable production for the year ramps up in Canada.
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A solution for consumers looking to buy cheap, locally produced vegetables, he said was to get vegetables that could be stored over winters, he said.
This includes products like Canadian-produced carrots, cabbages or beets.
He added that Canada was not the only country facing tariffs.
Mexico, too, was feeling the heat from Trump’s new trade policy.
“That could mean that some food products from Mexico that were going to the U.S. would then be cheaper coming to Canada,” von Massow said.
These could include Mexican beans, cauliflower and avocado getting costlier for Americans but cheaper for Canadians.
However, he said what happens in the days to come will depend on Ottawa’s response.
“There’s less clarity on what the second round or the second tranche of retaliatory tariffs might be. And in that circumstance, we might see some increases in prices depending on what the government chooses to put retaliatory tariff on,” he said.
He added, however, that Trump’s tariffs on Canadian energy could also raise fuel prices in the U.S., thus raising the transportation cost for groceries.
Trump’s planned tariffs on automobile imports, particularly from Canada and Mexico, has threatened to disrupt the highly integrated North American auto manufacturing supply chain.
Experts are warning that the impact on the sticker price of cars will go up almost immediately after the auto tariffs kick in.
“Prices of cars, including used cars, will also climb as a 25 per cent tariff on all cars would paralyze the North American auto production, thus limiting supply and pushing up prices. As the inventory of new cars dwindle, prices of used cars will go up,” Nguyen said.
Opher Baron, professor at the University of Toronto’s Rotman School of Business, said since there is little time left before the tariffs kick in, it might be prudent to hold off buying car to avoid the price volatility in the aftermath of the tariffs.
“I would personally wait a little bit longer. See where things are, and then work towards getting a good deal,” he said.
He said used car prices could stay stable for some time, but eventually they may rise too given the volatility in the car market and as demand rises for used vehicles rather than new vehicles, where the tariff impact will be felt first.
“Used car prices are referenced to the new car prices. And as the new price increases, the used price increases a little bit with it,” he said.
Baron said it might be worth considering smaller vehicles, instead of large SUVs.
While all new cars will see price increases as a result of Trump’s tariffs, since Canada doesn’t exclusively manufacture any domestic vehicles, the increase will be proportionally higher for SUVs since they are priced higher to begin with.
Medicine and medical equipment
For some sectors, the price rise will not be immediate.
However, experts are warning that decisions being made now will have ripple effects months down the line.
“It’s like watching a slow-moving train accident,” said Mina Tadrous, assistant professor at the Leslie Dan Faculty of Pharmacy at the University of Toronto.
Tadrous co-authored a research paper published Monday, which says that tariffs and counter-tariffs on pharmaceuticals could create worldwide medicine shortages across the world over the next few months.
“Just like a car, a drug has multiple components coming from very different countries. The average drug sitting on our shelves probably has components in it coming from four to five different countries,” Tadrous said.
“As protectionism rises and more and more tariffs are placed, we’re going to see the supply chain being strained.”
Tadrous said anything from the supply of insulin, biologic drugs to IV bags from the United States could rise in cost from tariffs or counter-tariffs.
“Medical devices are also an area of concern as like a large proportion of medical devices come from the United States,” he said.
Tadrous added that close to $3 billion worth of drugs cross the border into the U.S. every year from Canada, which means Americans could see medicine prices rise.
This includes critical drugs like HIV medication, pain medication or antibiotics.
Are you making changes to your home budget, buying habits or business decisions out of concern about another round of tariffs? Reach out to Global News at shareyourstory@globalnews.ca and we may be in touch for an upcoming article.