Produce and packaged goods: What could cost more at the grocery store during a trade war

A grocery store aisle in Montreal on October 9, 2024. THE CANADIAN PRESS/Graham Hughes

As trade war talk has quieted down temporarily, Canadian consumers remain uneasy about how possible tariffs could impact affordability for everyday items, including groceries.

Experts in the food industry warn that produce and packaged goods could see the biggest rise in cost if the tariffs come to fruition on both sides of the border on March 1.

U.S. President Donald Trump’s tariffs and Canada’s retaliatory measures that were initially planned to come into effect on Tuesday were paused for “at least 30 days” on Monday night.

“Obviously, the retaliatory portion of the of the tariffs will have the most impact in regards to inflationary impact on groceries,” Michael Graydon, CEO of the Food, Health and Consumer Products of Canada association, told CP24.com.

“It just depends on the types of products that the government decides to put tariffs on. We saw the first list, which my understanding is only the first. There’s a fair amount of ingredients on those lists that are utilized in the manufacturing of goods here in Canada, and some of those ingredients just aren’t available in the Canadian market.”

He noted that packaging is another area of vulnerability for Canada.

“We rely a lot on the United States for packaging,” Graydon said.

“If they happen to get on the list as well in the future, then there’ll be implications from that aspect of it.”

Graydon noted that a rise in gas prices in the U.S. would have a trickle down affect on Canada.

“As the Americans start to experience inflation as it relates to gas prices, which we anticipate they will with a 10 per cent tariff on Canadian crude… we’re understanding that there could be as much as a 30 cents a gallon increase in gas prices,” he said.

“That is going to have an impact on costs as it relates to distribution and getting goods from the United States to Canada. And they’ll be applied into the cost of goods.”

‘Volatility is going to continue’

Fruits and vegetables will see “volatility” in price, Graydon noted, as Canada is heavily reliant on produce from other countries in the winter months.

He said while Canada has a “robust hydroponic industry,” it can’t meet the demands of Canadian consumers.

“Our winter months of volatility of pricing, you know, the infamous $10 head of cauliflower. Well that volatility is going to continue. It would just be more exaggerated as we go forward,” he said.

Sylvain Charlebois, agri-foods analytics lab director with Dalhousie University, told CTV News this week that he too sees some price increases coming in the produce department.

“The Canadian dollar is dropping and the buying power of our grocers is shrinking by the day so we are expecting some movement there,” he said.

Prices for dairy or poultry products will likely remain stable as those industries are already protected by supply management policies that limit American products in Canadian grocery stores via existing tariffs.

“Right now consumers are scrambling and they are looking for ways to make a difference to support our industry and that’s why a lot people are thinking about buying Canadian now,” Charlebois said.

“The good news is we may actually see more Canadian products. It will be easier for Canadian companies to get in and get some shelf space there.”

He said food items with the label “Product of Canada” are the “gold standard,” as this means most ingredients are made in Canada and the last step of processing is in Canada.

The push to ‘buy Canadian’

The trade dispute has reignited a strong consumer push to buy Canadian, with shoppers increasingly demanding clearer identification of Canadian products in stores.

Gary Sands, senior vice President of public policy & advocacy at the Canadian Federation of Independent Grocers (CFIG), highlighted that independent grocers, across the country are noticing an “avalanche of response” from consumers wanting to see prominent displays and identification of Canadian products.

“There’s an overwhelming desire from consumers to see more permanent Canadian identification of products in the store,” Sands said. “I think all of the grocery industry, independents and chains, are going to have to respond to that, as well as the suppliers.”

The federation represents nearly 7,000 independent grocers across the country and while the movement to support domestic products has gained momentum, Sands cautions against oversimplified product labelling, pointing out that supply chains are very complex.

“All the Frito-Lay chips that we eat here, those potatoes all come from Canada, and they’re processed at four plants in this country—in Alberta, Nova Scotia, Ontario, and Quebec—employing over 10,000 people,” he explained. “It’s an American company, but it’s Canadian products.”

Canadian demand isn’t going away anytime soon

Sands believes the momentum behind the “buy Canadian” movement is not just a fleeting response to tariffs but rather a long-term shift in consumer priorities.

“I don’t think this is going to die down next week or next month or next year. I think this is here to stay,” he said.

Retailers who have already begun emphasizing Canadian products in their stores are seeing positive reactions from customers.

“The ones who have already started doing that are getting lots of applause in-store from customers. And I’ve also seen it on social media,” Sands added.

While some concerns remain over potential job losses if stricter labelling policies are implemented, Sands emphasizes that the shift is about supporting local economies, not shutting out American goods.

“This will turn into not being something [so much as] anti-American. It’s more pro Canadian,” he said. “We must hope for the best but prepare for the worst.”