U.S., China trade war could hike prices for Canadian consumers, small business owners say

As the trade war deepens between the U.S. and China, Canadians may notice a higher cost for many items from cell phones to sneakers. CTV’s Tyler Fleming reports

A growing trade war between the United States and China is poised to hit Canadian consumers, particularly when it comes to electronics and other imported specialty goods.

Nicholas Chaar, owner of IMS International Mobile Services in Ottawa, says the cost of repairing and replacing smartphones is already climbing.

“Everything is made in China or other countries, and they all have to be shipped and brought to Canada,” Chaar said. “From the shipping charges to carbon tax to the tariffs, the customer is paying $1.50 for something that used to cost one dollar.”

U.S. President Donald Trump “authorized” a 90-day pause on some tariffs while vowing to raise levies against China to 125 per cent, effective immediately, he said Wednesday.

China has again vowed to “fight to the end,” raising tariffs on American goods to 84 per cent, while adding an array of additional countermeasures.

Chaar says his shop has enough parts in stock to last about three to four weeks, but after that, prices could spike depending on what happens at the border.

“We just don’t know what it’s going to cost yet,” he said. “Our distributors don’t know either, and we won’t find out until we have to pay the import duties at customs.”

China is a manufacturing powerhouse, shipping nearly half a trillion dollars in goods to the U.S. last year. Much of that is purchased by large distributors which then sell and ship products to Canadian businesses. But with China facing tariffs far north of 100 per cent, those added costs will ultimately be for the consumer to bear.

“The only way this ends well is if China and the US cut a deal in the next 24 hours and the tariffs go away, but it doesn’t look like that’s going to happen because they’re two superpowers and they’re both dug in,” said retail analyst Bruce Winder.

“Smaller companies will be disadvantaged more because big companies can do direct imports out of China and avoid that, but small companies that don’t have the volume to do direct imports out of China will have to buy through that U.S. company.”

That’s a reality Bill Chappell, owner of The Hobby Centre in Ottawa, has been dealing with for decades.

Holding up a model of the Starship Enterprise, Chappell points out the irony.

“It’s an American icon from an American company, produced in Guangdong province, China,” he said.

Now, with rising tariffs, Chappell is bracing for what could be out-of-this-world pricing on many of his products.

“When you have to pick where to spend your dollars, discretionary spending is where you get hurt,” he said.

“We may have to outsource and look outside the box. Some of my distributors are already scrambling to find alternate sources for different products that they can substitute for the ones that came from the states. I loaded up on some things at the older price to try to wait this out and see where it goes.”

Chaar and Chappell both say consumers are likely to pull back on spending, a trend they hope will force prices to settle.

With files from The Associated Press