Canada's retaliatory tariffs against the US take effect, consumers to face direct price increases

⑴ Canada has imposed retaliatory tariffs on US goods worth approximately 28 billion Canadian dollars, marking the official entry of countermeasure trade actions into the stage where consumer prices are affected. The effect of rising import costs will gradually become apparent at the end retail level. ⑵ According to institutional estimates, currently about 7% to 8% of goods imported from the US have been included on the countermeasure list. The impact on consumer prices comes through direct pathways, such as household goods, daily consumer items, and food purchased by end users, as well as indirect pathways, with tariffs on industrial equipment and capital goods driving up production costs and partially passing these costs on to downstream customers. ⑶ The report points out that with Canada’s inflation rate already at a relatively high level and hovering near 3%, this round of tariff increases is expected to further boost inflation by about 0.2 to 0.3 percentage points, making the central bank’s task of controlling prices even more complicated. ⑷ Overall, the upward pressure on prices brought by these countermeasures, combined with existing signs of economic slowdown, may cause more pronounced pressure on the consumer side in Canada. In the future, attention should be paid to the speed at which companies pass on costs and consumers’ elastic responses to price increases.