Tariff price hikes may take time to hit shelves as retailers work through inventory

Ottawa — Canada's counter-tariffs on U.S. goods have triggered a flurry of retaliatory actions from the White House, but retail experts warn there will be a delay before consumers notice higher prices at checkout counters. While the impact is expected to affect a broad spectrum of products, Matt Poirier of the Retail Council of Canada states that stores will first need to clear their current inventory before introducing the new, more expensive goods.

Poirier, the vice-president of federal government relations at the industry group, explained that once this inventory is sold or expires, Canadians may start to see price increases. Short-lived items and products with quick turnover rates are likely to experience price hikes sooner, followed by more durable goods such as ovens and washing machines.

Canada's retaliatory duties, ranging from 15 to 50 percent on approximately $28 billion worth of American products, including carpets, electronics, and clothing, prompted U.S. President Donald Trump to impose a ban on certain Canadian goods starting September 29. Canadian shoppers may initially be somewhat protected from the full brunt of the escalating trade war as the new tariff costs are worked out along the supply chain, with businesses temporarily absorbing some of the cost by cutting profit margins, according to the experts.

International business professor Andreas Schotter from Western University's Ivey Business School clarifies that a 50 percent tariff does not directly translate to a 50 percent price increase at the point of sale. The tariff cost is negotiated throughout the supply chain, with the American supplier potentially lowering its price, the Canadian importer or retailer accepting a smaller margin, and the customer ultimately paying more.

However, the distribution of this burden is not expected to be instantaneous, Schotter explains. "Most consumers will see a lag as existing inventory is sold and more expensive shipments arrive," he says. "Goods already in Canadian warehouses or stores were imported at the old cost." The first tangible effects of the counter-tariffs are likely to be fewer promotions and a reduced range of products as retailers replace American goods with Canadian or overseas alternatives.