Yesterday, March 4, the tariffs imposed by the United States took effect in Canada. Ottawa retaliated by imposing tariffs on U.S.-origin products, also by 25%.
But what does this mean for the daily lives of Montrealers?
What are tariffs?
The tariffs imposed by the United States are an additional tax on imports. This means that as of yesterday, imports into the United States from Canada and Mexico will be taxed at a rate of 25%. Imports of Canadian hydrocarbons will be taxed at 10%.
Exports to the U.S. account for a large share of Canadian trade, and with the increased tariffs, many Canadian companies are going to have to think about moving their operations to the U.S. (to avoid these export tariffs), or reducing their exports to the U.S. This makes sense, because the U.S. is the world’s largest exporter of oil and gas.
This makes sense, because the price of Canadian goods to Americans will rise, and they’ll be driven to seek those same goods elsewhere.
Ottawa’s retaliatory tariffs on U.S.-origin goods, also 25%, will have the same effect on U.S. exports to Canada.
For the time being, Canada’s retaliation strategy appears to be a means of exerting pressure to make the tariff increase disappear.
Which products are affected?
By 2023, exports to the United States will account for 77% of the country’s total exports. With the U.S. as our best customer, we’re talking about hydrocarbons (oil, oil sands, natural gas), automotive parts and vehicles, consumer staples and agri-food products.
Canadian exports are falling. This is not good for the country’s economy, but we’re not going to see the effects on our daily lives right away (we’re talking for the majority of Montrealers, of course).
Canada’s retaliatory tariffs will affect American products imported into our country. Clothing, agri-food products, cars, raw materials, construction products, cosmetics…
Prices of U.S.-origin products in grocery stores and supermarkets are likely to rise. This has a direct impact on the daily lives of all Canadians. So we’ll have to do without Florida oranges and California avocados…
What’s more, the SAQ has withdrawn all American wines and products from its stores and online sales site. And from what we understand, they will also be withdrawn from sale in grocery stores, restaurants and bars.
And beware, Canada’s tariffs are on products from the USA, not on American-branded products. Lay’s potato chips, for example, are mostly made in Quebec, so buying them means helping the local economy. Salt, vinegar and the feeling of having supported the Quebec economy.
So what does this mean for Montrealers?
It means we’ll have to spend a little more time at the grocery store to choose to buy local – plus, it’s good for the country’s economy, it’s good for the environment and it’s good for our local producers.
Priority is given to products bearing the Product of Canada label, which are made in Canada and contain less than 2% foreign materials and products.
But, like Lay’s, we also buy Made in Canada products, where 51% of the labor costs were incurred in Canada.
We go to our local microbrewery, we go to the market, we visit the country, we feel a little more patriotic than usual…
Bon courage!