U.S. and Canadian imports will soon result in price increases, analysts expect, though for some items this may wait awhile. On Tuesday, U.S. President Donald Trump imposed 25% tariffs on goods imported from Canada and Mexico. Canadian Prime Minister Justin Trudeau retalliated with $30 billion of immediate tariffs and another $125 billion on March 25.In an interview with Western Standard, Ian Lee, Business Professor at Carleton University said for most retail items, prices will be up within a week or two. He said grocery buyers and the food service industry will soon see the difference.“We import all of our fruit and vegetables in the winter months, because we can't grow blueberries in the wintertime in Canada,” Lee explained.Lee says brand familiarity and greater financial resources leave restaurant chains more able to “eat any increase” from tariffs without substantially raising prices, but independent ones will suffer worse.“I used to lend to restaurants, and it’s terrible; it's got the highest failure rate of any industry because there's so much competition,” Lee said.The hike will be delayed for larger commercial items like “big capital equipment, like bulldozers or dump trucks,” Lee said, since pre-tariff inventory won’t be sold so quickly.The professor says any added costs for telecoms and airlines will probably be almost fully passed onto consumers, given the lack of competition.Ian Madsen, Senior Policy Analyst for the Frontier Centre for Public Policy, said in an interview that some price hikes will be delayed because businesses increased their inventory to get ahead of the tariffs. Also, many imports don’t come from the U.S. and won’t be affected.“All the clothes and toys and sporting goods and housewares and furniture comes from a lot of other countries: China, Mexico, India, Vietnam; Japan for the more advanced things, and South Korea,” Madsen said.Madsen said in the long-term, the price increase on a tariff isn’t always fully reflected in the sticker price for items. This is because a fully higher price turns off consumers, forcing businesses to drop prices to match the weakened demand.“It is not necessarily going to cause a big rise in inflation, but it could cause some loss of purchasing power in another way for individuals and for businesses and of course, institutions, governments and non governmental organizations that buy a lot of stuff,” Madsen explained.On the downside, some businesses may increase prices regardless because the market has changed and consumers are expecting it. It will take time to know how markets will adjust.“When you raise prices on one chunk of the economy, the businesses and industries, whether foreign or domestic, that compete with those that are not subject to the tariffs–that gives them cover to raise their prices too, because the US products have become more expensive,” Madsen explained.Barry Prentice, professor of supply chains at the University of Manitoba, says supply chains are not changed quickly or easily. He hopes the Canadian government is prudent in its approach to retaliatory tariffs.“There's no sense hurting the Canadian economy when you're trying to punish the people who should be changing their minds,” Prentice said. “Obviously they're going to want to hit upon the Republican states that have major exports, and Kentucky bourbon is always the favorite target to start with.”Selective or not, sooner or later, the pain from tariffs will definitely hit Canadians, Prentice says.“It depends on the frequency of purchases and it depends on the perishability of the product,” Prentice explained.Auto tariffs seem “the craziest one of all” to Prentice. He said supply chains for auto production in the U.S. often involve Canadian and Mexican parts, so tariffs are “futile.”“If you put a tariff on an input, typically, that tariff is removed and that product is re exported, but [Trump is] not even talking about that. So again, it's verging on the silly, what he's proposing, and I can't imagine this is going to hold again.”Prentice believes the tariffs won’t last because they are destructive to economies on both sides of the border and because of how Trump implemented them.“He's undertaking these things under a special provision of power given to the President on an emergency basis to deal with emergencies. So where is the emergency?” Prentice asked.
