Tariffs hitting shoppers in Canada and U.S., with some prices set to rise at Loblaw stores, Walmart
Loblaw has been aggressive in signalling which products are affected by tariffs
A trip to the store is about to become more expensive for shoppers on both sides of the 49th parallel, as pre-tariff inventory runs out at Loblaw stores, and Walmart is set to raise prices in the U.S.
Loblaw Cos. Ltd. chief executive Per Bank said Wednesday in a LinkedIn post that the number of tariff-hit products at the grocery store could soon spike, as products brought into Canada before the trade war began are bought up from store shelves, which means prices for some items will go up, too.
Meanwhile, Walmart said it must raise prices in U.S. stores due to higher costs from tariffs implemented by U.S. President Donald Trump, after announcing its first-quarter profit slipped.
Loblaw has been aggressive in marking which products are affected by tariffs, a tally it has so far limited to a little over 1,000 items. But that total will rise to more than 3,000 within the next week or two, and could peak at over 6,000 within the next two months, according to Bank's post.
"While the tariff situation might be improving between the U.S. and other countries, that's not yet the case here in Canada. In fact, we'll be facing a large wave of tariff-related increases in the weeks ahead," he said.
Tariff-affected items will still account for a small share of the roughly 80,000 items the company stocks, but customers will notice changes in such categories as natural foods, pantry staples and health and beauty products, he said.
"It's been good to see Prime Minister [Mark] Carney and other leaders engaging in dialogue with U.S. officials, as we're all hoping for a rapid de-escalation of this situation."
Bank also said he was pleased to see the federal government has changed its counter-tariff policies to limit the charges to finished food products coming in from the United States. In mid-April, the government announced several adjustments to the $60 billion in counter-tariffs it announced in March, to ease the burden on Canadian companies and consumers.
A key measure for grocers was a six-month suspension of counter-tariffs on a broad range of U.S. goods used in Canadian manufacturing, processing and food and beverage packaging. That means, for example, that a Canadian company could import something like milk if it's used to make another product without the additional counter-tariffs, but that milk for retail sale wouldn't be exempt.
The changes mean Canada has essentially paused nearly all of its counter-tariffs, Tony Stillo of Oxford Economics said in a note. He said the changes will reduce price pressures and bring the effective tariff rate increase on the U.S. to nearly zero.
From the start, the counter-tariffs excluded U.S. produce like lettuce, which the Canadian market is especially reliant on.
Canada's counter-tariffs have generally targeted items that have alternatives produced in Canada, such as dairy, poultry and grains, said Mike von Massow, a University of Guelph professor and food economist.
"They put them on things that were highly substitutable, so that if you were willing to make small changes, you weren't going to get impacted as much," he said. "Now, if you are interested in a specifically aged cheddar from Wisconsin, then that's going to go up in price."
While many items aren't directly tariffed by Canada, there are indirect price pressures from other areas, like U.S. metal tariffs, and the general uncertainty brought on by the trade war, he said.
"The uncertainties with the U.S. [have] the potential to increase prices even in the absence of tariffs."
While Canada has added numerous exemptions to its counter-tariff measures, they remain on high-profile grocery items like orange juice and alcohol, as well as a host of other products, ranging from uncooked pasta to guinea fowl in a glass jar.
Gary Sands, the vice-president of the Canadian Federation of Independent Grocers, says that price increases could be more burdensome in rural and remote parts of Canada where the costs that consumers pay for goods are already higher to begin with.
"The impact of these counter-tariffs is even more significant on those communities," he told CBC News in an interview.
Walmart will try to keep prices 'as low as possible': CEO
Walmart has built-in hedges against some tariff threats. Two-thirds of Walmart's merchandise is sourced in the U.S., with groceries driving much of that. Groceries account for roughly 60 per cent of Walmart's U.S. business.
Still, Walmart isn't immune and said the price hikes come even as the company works to absorb the costs of the tariffs.
"We will do our best to keep our prices as low as possible, but given the magnitude of the tariffs, even at the reduced levels announced this week, we aren't able to absorb all the pressure given the reality of narrow retail margins," CEO Doug McMillon said in a statement.
He said price increases on the shelves will feel more gradual, but they had already begun as early as April, and they accelerated in May. The company said it has been focused on back-to-school receipts.
Walmart imports general merchandise from dozens of countries, McMillon said. But China in particular, which has been a focal point in Trump's trade war, represents a big chunk of volume in certain categories like electronics and toys.
Tariffs on countries like Costa Rica, Peru and Colombia are raising costs on groceries like bananas, avocados, coffee and roses, he said. Walmart says it is absorbing costs on general merchandise within departments and not yet passing along rising costs in some cases.
Walmart is also asking suppliers to change input materials for components, for example, using fibreglass instead of aluminum, which Trump hit with tariffs in early March.
So far, Mattel, Xbox, Stanley Black & Decker and Procter & Gamble are some of the other big U.S. businesses that have either announced price hikes or said they are anticipating them.
With files from the CBC's Abby Hughes and Anis Heydari, and The Associated Press
.png)