With counter-tariffs gone, these products will drop in price – but not immediately

Produce in a Levis, Que., market, Wednesday, Feb. 5, 2025. (THE CANADIAN PRESS/Jacques Boissinot)

While Canada’s counter-tariffs on many American goods will be dropped on Sept. 1, Canadians will have to wait to see prices fall at the grocery store.

“Prices will not come down immediately, but they will come down,” food economist and University of Guelph Prof. Mike von Massow told CTVNews.ca. “We’re not talking months, we’re probably talking weeks.”

On Friday, Prime Minister Mark Carney announced that Canada would be dropping 25 per cent counter-tariffs on U.S. goods that are covered by the CUSMA free trade agreement between Canada, the U.S. and Mexico. The move, which is meant to kickstart trade negotiations with the U.S., does not include counter-tariffs on U.S. steel, aluminum and autos.

It does, however, cover grocery essentials like fresh produce, coffee, tea, flour, sugar, pasta and orange juice, which should all eventually drop in price. But Canadians who are hoping for immediate relief with their grocery bills will have to wait before lower prices reach consumers. How long that takes will largely depend on a product’s shelf life and existing inventory.

“So things that are more perishable, like fresh orange juice as an example, should come down fairly quickly in price, because I expect that those shipments are coming in quite regularly, and as soon as the tariffs are off, the price of those will come down,” von Massow explained. “Coffee has clearly got a longer shelf life, so as soon as their current inventory is used up and orders start coming in after Sept. 1, those prices should come down.”

The Canadian Federation of Independent Grocers welcomed Canada’s decision to ditch counter-tariffs. Spokesperson Gary Sands says with 80 per cent of Canada’s fruit and vegetables coming from the U.S., the first price drops will probably be found in the produce aisle.

“If you’re talking about fresh produce and those kind of things, it could be a week or two,” Sands told CTVNews.ca. “For some of the other stuff that’s been subjected to counter-tariffs, it could be even longer, because some of them are things that are on the shelf for longer.”

That means higher prices could linger for products like candy, peanut butter, ketchup, spices, toothpaste, bottled water and paper towels.

“I can’t speak for the chains, but I can tell you for the independent grocers, as they’re able to lower the price, they’re going to,” Sands said. “Of course, you’re immediately going to pass that on, but not for products that have already been purchased and paid for.”

The Canadian Federation of Independent Grocers represents more than 6,900 independent grocers across Canada. Von Massow expects the larger grocery chains will also follow suit and drop prices.

“Historically, we as economists say that prices are sticky downwards: they tend to come down less quickly than they go up,” he said. “I think in this circumstance, because of the news around it, because of the visibility of which products it is, that there’s little risk that retailers will take advantage of the removal of the tariffs to squeeze a bit more margin out of these products.”

Because of other factors, von Massow says prices for products like beef and canned foods will remain high.

In an online statement, Canada’s largest grocery chain said it was committed to lowering prices once counter-tariffs disappear.

“In the days ahead, the price of goods in all grocery stores impacted by tariffs will start to come down,” Loblaws announced. “Prices will come down over time, as we sell through inventory that was purchased based on tariffed pricing.”

Along with signage for Canadian products, Loblaws uses a “T” symbol for items with prices affected by tariffs. The company says the “T” will remain “as long as the price of that item is impacted (by) tariffs.”

CTVNews.ca also reached out to Canada’s other large grocery retailers – Sobeys, Metro and the Pattison Food Group – which did not immediately respond to requests for comment.

Both Sands and von Massow also expect that the current “Buy Canadian” sentiment will continue to drive consumer choices, even after Canada and the U.S. resolve their ongoing trade spat.

“It has been remarkably resilient,” von Massow said. “I think ‘Buy Canadian’ will continue.”

“It’s seismic and it’s showing no sign of dissipating,” Sands added. “I think there’s been a permanent shift in consumers’ attitude, there’s no doubt about that.”