Canadian businesses brace for rising costs as U.S. tariffs impact sectors

Some businesses including a local craft brewery warn U.S. tariffs may soon translate to higher prices for their customers. CTV’s Tyler Fleming reports.

While Canada has avoided new sweeping U.S. tariffs, existing levies on aluminum and automotive products continue to weigh on businesses, raising concerns that consumers will soon see higher prices.

At Kichesippi Beer Co. in Ottawa., owner Paul Meek says tariffs on aluminum cans, which are purchased from the U.S. will make operations more expensive.

“Tariffs on cans is an ongoing concern and we know that there’s going to be a direct hit,” he said. “We didn’t hear from our suppliers yet on how much of the price change they’re willing to eat, if any, and then we have to decide. Are we going to eat any of those costs. We know that’s going to affect the end price for the consumer.”

The brewery buys about 50,000 aluminum cans at a time, and with a 25 per cent tariff in place, the cost is rising.

Switching to glass bottles would require a near $500,000 investment, an option that isn’t feasible.

“The ideal situation is bringing in a full tractor trailer load which would be 96,000 cans but we don’t have the cash for it, and we don’t have the space for it,” said Meek. “We are pretty much a ‘just in time inventory.‘”

Carleton University business professor, Ian Lee, says many businesses operate on lean supply as a method to increase profitability, but tariffs will ripple costs.

“It means the inventory gets used up … you don’t have a cushion anymore,” he said. “And so the higher cost in inventory if it does go up because of tariffs has to be adopted or used very quickly. Most stuff you’ll see price changes in 10 to 15 days of so-called a fast-moving consumer goods, anything that’s in a grocery store, burgers, retail.”

But given President Donald Trump’s history of on again, off again tariffs, what’s imposed on Canada now won’t last long, he says.

• TRUMP’S TARIFFS: Full coverage of U.S. President Donald Trump’s tariffs on Canada

“The tariff war is so destructive. It’s going to disrupt too many lives and too many supply chains on both sides of the border, and I don’t believe that Trump is oblivious to that.,” said Lee. “The longer the tariffs stay on the more destructive and more harmful. It is for small and midsize businesses because they have far fewer resources than big companies. But there is light at the end of the tunnel, and I don’t mean in 10 years or five years. I think before the end of this year we will see a negotiated settlement because it’s in the strategic self interest of both sides, not just the Canadians, but also the Americans.”

Meek expects that beer prices could start rising as early as May or June, with increases likely before Canada Day.

“It’s one of those hope for the best but prepare for the worst and right now we have to prepare for the worst-case scenario,” says Meek. “We definitely hope that this is a short-term thing and that our lobby groups and our government can help defend small business.”