BoC report estimates U.S. counter-tariffs pushed prices up about 6% last year

A sign advising that products from the U.S. affected by a tariff will be marked with a symbol at the shelf, with a QR code linking to a Government of Canada website, is seen in a grocery store in Ottawa. THE CANADIAN PRESS/Justin Tang

OTTAWA — Analysts at the Bank of Canada estimate prices on goods affected by Ottawa’s counter-tariffs against the United States last year were roughly six per cent higher on average than non-tariffed goods.

The federal government imposed tariffs of 25 per cent on a variety of grocery items, clothing and other household staples coming from the United States for about six months starting in March 2025 in retaliation to U.S. President Donald Trump’s initial tariffs.

Researchers at the Bank of Canada released a report Monday comparing the costs of more than 100,000 tariffed goods at seven retailers to a control group of products unaffected by duties.

The analysis estimates nearly a quarter of Ottawa’s counter-tariffs were passed on to prices paid by consumers by mid-June 2025. This roughly matched the pass-through observed in the United States from Trump’s global tariffs during the same period, the analysts noted.

The boost added about 0.3 percentage points to headline inflation last year, according to the report. The annual pace of inflation largely floated around the Bank of Canada’s two per cent target in 2025.

Substitutes for tariffed goods sourced domestically or imported from non-U.S. markets meanwhile saw no significant price hikes compared with the control group over the same time.

The report said the bulk of those higher prices on tariffed goods fell back in line with the control group three months after Ottawa removed most of the counter-tariffs in September.

The analysis found that retailers’ perceptions of how long the trade dispute would last affected the pace at which they hiked prices.

For instance, one appliance retailer in the study saw prices spike in the days after April 2, 2025 -- “Liberation Day” in the United States when Trump ratcheted up his global tariff campaign -- despite the fact that Canada’s counter-tariffs had been in place for a month by that time.

“When firms expect a tariff to be short-lived, they absorb most of the cost. When they expect a tariff to last for some time, they pass some of it on to consumer prices,” analysts concluded.

Researchers found products that were flagged to shoppers as being subject to tariffs were also more likely to sport higher prices than tariffed goods that didn’t advertise the impact of duties.

The tariff banners helped shift the burden of price increases off the retailer itself, the Bank of Canada analysts said.

“This reduces the risk of customer backlash and gives retailers more room to pass through cost increases, which is what appears to have occurred in 2025,” the report read.

Most Canadian goods are still able to enter the United States tariff-free thanks to the Canada-U.S.-Mexico agreement on trade. U.S. tariffs on steel, aluminum, autos and other key industries remain in place.

Canada continues to levy counter-tariffs on select steel, aluminum and U.S.-made autos that don’t comply with CUSMA, and imposes tariffs on global steel imports above certain quotas.

This report by The Canadian Press was first published May 11, 2026.

Craig Lord, The Canadian Press