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If you’ve been keeping up with the news over the last several months, you’ve likely heard the word “tariff” being mentioned. Without getting too far into the weeds about it, we wanted to give you some of the basics about what a tariff is, and how all this talk about them could impact you and your wallet. First, a little background.
What is a tariff?
Quite simply, a tariff is a tax placed on a class of imported goods. While there are lots of reasons behind tariffs, the general idea is to raise revenue and protect a country’s domestic industries.
What’s the deal with the new Canadian/US tariffs?
This past May, US Commerce Secretary Wilbur Ross announced that there would be a 25 per cent tariff on Canadian steel imports and a 10 per cent tariff on aluminum imports as of June 1.
Canada responded with our own trade restrictions—tariffs on US steel and aluminum, along with a variety of US consumer products. This includes all kinds of common items you might find in your home, from mayo and strawberry jam to dishwashers, lawn mowers, and toilet paper.
What could all of this mean for my wallet?
According to economists, the immediate impact of the tariffs on US steel, aluminum, and consumer goods is expected to be small here in Canada. The US goods in question account for only about 2 per cent of Canada’s imports—and it’s worth noting that most of these goods can be alternatively sourced from Canadian companies.
Looking at the longer-term picture, as far as the supply chain goes, many retailers have supply contracts for their products, meaning they can’t adjust their list of US goods all that easily. Since the tariff applies to the price paid to import a product, not the retail price, it’s up to each individual company to decide on whether or not to pass along the markup to consumers.
What can I do?
All things considered, you likely won’t notice a massive price jump in the immediate future when you’re reaching for your go-to imported coffee, orange juice, or ketchup. But it’s another reminder to be a thoughtful consumer when you’re doing your weekly shopping. Do your homework! Read labels and ask questions about where the things you purchase are coming from. And if possible, now’s a good time to support local shops and businesses in your community. Plus, it’s good for the environment too!