What Ottawa's import tariffs on U.S. goods means for orange juice and American whiskey
Published Friday, June 1, 2018 3:27PM EDT
A group representing Canadian retailers has flagged orange juice, lawn mowers and whiskey on its list of U.S. goods with limited “acceptable substitutes” under the new import tariffs Ottawa plans to levy against its neighbour this summer. But the risk of a citrus beverage shortage, or steep price hikes on U.S. mowers, may not be a huge concern.
Over $16 billion in retaliatory tariffs on Canadian imports of steel, aluminum, and other products from the U.S. are set to take effect on Canada Day as part of Canada’s latest salvo in an escalating trade spat with the U.S.
The Retail Council of Canada is keenly monitoring the impact of the wide range of “other products” from America listed by the Department of Finance.
“There are certain types of products where we are struggling to see the immediate sustainability. One of those obviously is orange juice,” Karl Littler, the council’s vice president of public affairs, told CTVNews.ca on Friday. “You’re not going to get that from a Canadian source of supply.”
The products on Canada’s list are mainly ones the government believes can be substituted from other sources, whether from within Canada or from foreign suppliers. Listed retail goods and grocery items will, as of July 1, be subject to a 10 per cent import tariff.
“I certainly wouldn’t expect a giant spike,” Littler said of retail prices. “The very worst case would be a 10 per cent consequence. Because of the fact that it is on the wholesale price, you can typically expect that it will be somewhat less than 10 per cent (at retail).”
He notes that it’s important to remember that the wholesale price of goods is one of several factors that determine prices at the retail level, and suggests U.S. sellers may even be willing to lower their prices if demand in Canada starts to wane in a meaningful way.
Littler said Ottawa’s tariffs were crafted with the U.S. congressional mid-term races in mind in order to “hit them where it hurts,” them being the Trump administration. Consumers who demand U.S.-made products from those regions will be most acutely aware of Canadian tariffs at the checkout counter.
“Florida OJ, Kentucky and Tennessee whiskies, Michigan, Pennsylvania, Indiana and Ohio steel. Pennsylvania chocolate (and) Ohio lawnmowers,” he said, listing political battleground states, and ones economically tied to specific industries.
TIME TO STOCK UP?
Littler said a lot with respect to retail prices will depend on how long Canada’s tariffs remain in place.
“I’m hesitant to tell people how much Jack Daniel's to buy,” he said. “Obviously, right now, there is no impact on the stock on the shelf. If this drags on, and the supplies are depleted, and the imports prior to July 1 are depleted, then you are going to see a price impact inevitably.”
ADVICE FOR OTTAWA
Littler said Ottawa has no choice but to return fire against the latest U.S. sanctions on Canadian aluminum and steel. However, he hopes officials will be sensitive to the cost Canadians pay for uniquely American goods.
“We want them to fight in the Canadian corner with respect to the overall trade spat,” he said. “But we also want them to show flexibility where substitutes are not available at any reasonable cost.”