From boats to beer, Canadian businesses blaming U.S. tariffs for price increases
Published Tuesday, August 7, 2018 9:58AM EDT
Last Updated Tuesday, August 7, 2018 10:06PM EDT
OTTAWA -- From beer to boats, Canadian businesses are feeling the effects of the United States’ June imposition of steel and aluminum tariffs.
The 25-per-cent tariff on steel and 10-per-cent tariff on aluminum means products made from these metals and sourced from the U.S. are becoming more expensive for businesses that rely on them, and they’re having to consider how to offset the cost, potentially passing it on to consumers.
For Canadian breweries, this has some looking at their current inventory of cans to see just how many more six-packs they can fill before having to purchase more cans at a higher cost.
According to Beer Canada, 70 per cent of the standard 355ml cans are supplied by Canadian manufacturers, though all of the 473ml tall cans are sourced from the United States and are impacted by the 10-per-cent tariff.
The tall cans are a common container of choice for small Canadian breweries.
“For them, if that’s the only container that they are packaging in, they don’t have the option of going to bottles. For sure it’s going to be a very big impact for them,” said Beer Canada President Luke Harford.
He told CTV News that Beer Canada’s members -- who produce 90 per cent of the beer brewed in Canada -- are concerned about what this will mean for their bottom line.
“At the individual container level it may not be a really huge increase, but the brewer’s faced with the bill that they have to pay and then they have to find a way to pass that cost on in a way that doesn’t affect their ability to sell the product,” he said.
On its most recent earnings call, Molson Coors Brewing Company President Gavin Hattersley said the company may have to adjust its prices on account of the tariff, among other factors.
Bigger-ticket items like boats are also being impacted by the tariffs, and one Ottawa-area business is having a sale to clear out the current tariff-free inventory before the new, more expensive 2019 line arrives.
“From pontoons to aluminum boats, all the prices are going to go up,” Marc Savage, the co-owner of Orleans Boat World & Sports, told CTV News.
He said that while it’s too soon to know the real impact of the tariffs on his business, the price of the boats they bring in from American makers are likely to go up by at least 10 per cent. If that impacts the number they are able to sell, they could be looking at layoffs, Savage said.
During his ongoing tour talking to Canadian businesses about competitiveness, Finance Minister Bill Morneau said Tuesday that the federal government is aware of the impacts being felt by some Canadian companies, and that they are continuing to negotiate with the U.S. administration while Canada’s retaliatory counter-tariffs on imports of steel, aluminum, and other American goods remain in place.
Campbell’s, Coca-Cola feeling squeezed
While Coca-Cola CEO James Quincey recently told U.S. media that it will be raising prices, a spokesperson for Coca-Cola said that while in Canada the company is facing a similar squeeze, Coca-Cola isn't sure if it will implement the same increases here.
Later this month the Campbell Company of Canada -- which uses steel cans -- is set to hike the price on a "broad range of products,” company spokesperson Alexandra Sockett told CTV News in an email.
Though the exact amount -- likely just a few cents on each can, if that -- has yet to be determined, Campbell’s says the retaliatory tariffs, compounded with rising packaging, ingredient and freight costs are to blame.
“If tariffs remain… we may end up paying more for our food down the road. There’s no question about it,” said Sylvain Charlebois, a food distribution and policy professor at Dalhousie University told CTV News.
“The real question is when? Companies will try to hedge a little bit based on what they hear, what’s happening in Washington, in Ottawa, and in other places, and if they feel that they need to move prices because they feel that tariffs will remain for an extended period of time, they will move prices,” he said.
With a report from CTV News’ Omar Sachedina and with files from The Canadian Press