I know Canadians are feeling the financial pinch. The tariffs set by the United States have increased prices on a range of products. The automotive industry has been one of the hardest-hit industries, forcing consumers to reconsider their purchases. Experts tell us that in light of increasing costs, people are deciding to hold onto their cars longer. This further solidifies the narrative that waiting on new car purchases is the smart move.
Prof. Andreas Schotter, an expert in behavioral economics, showed how tariffs have consumer choice and why this matters. He added that the connected automotive manufacturing supply chains both U.S. and across Canada have worsened things. With new car prices growing so high, Canadians are making fewer purchases and holding onto their cars longer. This decision allows them to save on other operating costs.
In kind, the Canadian national government introduced counter-tariffs on a range of American-made goods, ranging from washers and dryers to refrigerators and HVAC products. This change came largely in response to tariffs that the U.S. placed on exports from Canada. Consequently, a retaliatory cycle formed, hurting consumers in every industry.
In the agriculture sector, Canada focused on U.S.-produced tomato ketchup, peanut butter and other sauces. Prof. Michael von Massow highlighted that fruit juice prices have surged by 7.5% from last year, a direct result of countermeasures on American citrus imports. Likewise, canned soups are up 8%, largely because steel and aluminum levies raised packaging costs.
The increase in appliances is remarkable. In June, refrigerators and freezers experienced an average price increase of 2%. At the same time, dishwashers and laundry appliances soared 4.5% from last year. Clothing and footwear prices soared by 2%, showing that inflation is spreading to all of the basic consumer necessities.
Prof. Schotter noted that many retailers are already finding creative ways to respond to the increased prices caused by the tariffs. Instead, many retailers are having “pre-tariff” sales on heat pumps and dishwashers. They want to appeal to consumers who are worried about increasing prices. To address these needs, Loblaw, Canada’s largest grocery retailer, has found approximately 7,500 products with a “T” label. This is in addition to price increases due to tariffs. The president of the American Trucking Association recently declared a national crisis. These newly labeled items have experienced an average sales drop of 20%, showing just how price-sensitive Canadian consumers are.
Beyond these shifts in consumer goods prices, the housing sector has particularly experienced the negative impacts of tariffs. Areas around Ontario have already experienced a cooling effect on housing starts, down anywhere between 8% – 26%. This trend further illustrates the impact tariffs are having on consumer behavior and more broadly economic activity.
“An old hint that ordinary pricing is set to move up.” – Prof. Schotter
Though tariffs on imports are raising costs, one expert told SNAP that these factors are preventing large price hikes from occurring across the board, especially in key sectors. Andrew Barclay noted that “a lot of it has to do with the emergence of Southeast Asian and Asian clothing hubs, which has put downward pressure on prices.” The most egregious example comes from tariffs, which have led to enormous price increases in some key markets. Global market dynamics still have a significant impact on pricing trends.
Canadians have been adapting to new pricing models and availability. What we still don’t know is how tariffs will shape future consumer behavior and economic growth over the long run. Retaliatory trade measures continue to be a major factor influencing market conditions as well. This dynamic has disastrous consequences on the pocketbooks of both consumers and businesses.