Business and Economy
Trade war starting to show up in higher prices on some grocery items
By Abby Hughes, CBC News, RCI
Loblaws customers shop at a Toronto-area grocery store in March. Experts say the food system is starting to see the impact of counter-tariffs on U.S. goods. Photo: CBC / Evan Mitsui
After months of trade war back-and-forth, the impact of tariffs is starting to make its way onto our dining room tables, according to experts working in the Canadian food and grocery industry.
Small grocers in particular have been paying more for the products that line their shelves, said Gary Sands, senior vice-president of the Canadian Federation of Independent Grocers. While a number of produce items from the U.S. aren’t tariffed, fresh produce that is taxed has seen the most immediate increase, Sands said, given that it is perishable and cycles through stores quickly.
And because many of Canada’s 6,900 independent grocers operate on slim profit margins of around two per cent — much smaller than the margins in many other sectors — those increases are being passed on to consumers, Sands added.
When you’re on that kind of a margin, if you’re being handed increases by … the food manufacturers of, you know, four or five, six, sometimes double-digit [per cent] increases, you’re passing that on to the consumer and there’s just no way to get around that,
Sands said.
As part of Canada’s response to U.S. tariffs, the federal government imposed 25 per cent tariffs on $30 billion worth of U.S. goods on March 4. A number of food products are part of that list of affected goods (new window) — including orange juice, some berries, nuts, ketchup, shrimp and more. Those counter-tariffs are starting to show up in the supply chain.
On top of that, consumer price index data also indicates a slight increase in food prices. In February, the price of food purchased from stores was up by 2.8 per cent (new window) from February 2024. In March, the year-over-year price increase had risen to 3.2 per cent (new window).
Stuart Smyth, an agricultural and resource economics professor at the University of Saskatchewan, said tariffs likely had an impact on that.
We’ve had this threat of tariffs really since early February now,
Smyth said. It’s on and it’s off and it’s on and it’s off, so I think that uncertainty is having a factor on the pricing of a lot of goods.
The price increase on tariff-impacted items is also becoming visible on grocery store shelves. In the case of orange juice, for example, American products are often priced higher than those made elsewhere.
A comparison of pulp-free orange juices listed on the Loblaws website showed significant price differences between products marked “Prepared in Canada” and those from the United States labelled as being impacted by tariffs.
A President’s Choice brand pulp-free orange juice and an equivalent from Simply Orange — both identified as being prepared in Canada — were priced at $5 (new window) ($0.32 per 100ml) and $7.69 (new window) ($0.50 per 100ml) respectively. Meanwhile, the U.S.-made Tropicana pulp-free orange juice was priced at $8.72 (new window) ($0.66 per 100ml).
It was a similar story at Metro, which primarily has stores located in Ontario and Quebec. A 2.5-litre jug of Irresistibles pulp-free orange juice was listed online for $6.99 (new window) ($0.28 per 100ml) while a similarly sized jug of Tropicana orange juice was listed at $13.99 (new window) ($0.53 per 100ml).
Canadian prepared foods not spared
In addition to American goods in Canadian stores simply going up in price, tariffs are also beginning to increase costs for Canadian food producers, said Michael Graydon, CEO of the organization Food, Health & Consumer Products of Canada.
For example, a Canadian producer of canned tomatoes that sources their tomatoes from the U.S. would have seen a tariff on the produce since early March.
Coffee, chocolate and nuts — goods that are often used in the production of food in Canada — are also among items that are now subject to counter-tariffs, Graydon said.
All of this increases the costs for Canadian food producers. For the time being, Graydon said, the producers he’s heard from are mostly absorbing that increase, preferring to wait and see if the turbulent tariff situation changes again before upping their prices.
Could hit independent grocers harder
Meanwhile, the buy Canadian movement has put an extra layer of pressure on smaller retailers who are doing their best to shift their supply chains quickly, Sands said.
Consumers are being very vocal about this, they want and expect to see as much Canadian product … as they can on their shelves,
Sands said. I’ve been with this association 25 years, I’ve never seen anything like it,
Sands said.
WATCH: Shoppers keen to buy Canadian-made products:
They’re doing their best to buy produce from places in South America instead of the U.S., but Sands says those kinds of supplier swaps are hard for small businesses to do.
Michael von Massow agrees.
Now that there are tariffs on oranges, for example, he says grocers are likely seeking cheaper ones grown in Turkey or South Africa rather than ones from the United States. Whoever buys the most oranges would be first in line to get the sale, which means small grocers that are buying less may struggle to change their supply chains.
Sands added that some grocers that stocked American products are now finding it hard to sell. This puts them in a tough spot when they can’t recoup the cost of those goods, and adds yet another layer of stress.
Impact just starting to materialize
Despite the impacts seen by grocers and on shelves so far, the impact of tariffs hasn’t fully materialized yet. And some of the increases won’t be due to tariffs.
When suppliers want to increase prices, Graydon says most retailers make them apply for that change and give reasons as to why they think the increase is justified. He says this process takes six to 12 weeks, meaning some increases haven’t yet started showing up.
WATCH: Shopping for Canadian-made groceries with only $25
On the other hand, variety in grocery stores is helping Canadians avoid the high-priced tariff items, according to von Massow. Unless consumers are insistent on buying an American brand like Tropicana, for example, he said they can likely avoid the impact by buying a Canadian alternative.
Von Massow added that the impact of tariffs on food is also limited by what the federal government chose to include — and exclude — from that list of counter-tariffed products.
Leafy greens, which Canada buys from the U.S. in huge amounts at this time of year, aren’t getting levied, he pointed out.
I think the government was pretty selective as to which products they put it on to maximize pressure on the U.S. and minimize pressure on Canadian consumers, at least in the first round,
von Massow said.
As the weather gets warmer and Canada’s growing season gets underway, von Massow said it will be easier to find homegrown produce that avoids both tariffs and supply chain-related increases.
This article is republished from RCI.
