Calgary companies warn of price increases due to new tariffs
|globalnews.ca 01 Jul 2018 at 15:36|
Canada’s counter tariffs on a wide range of products went into effect on Canada Day, a month after the Trump administration slapped duties on U.S. steel and aluminum imports from Canada and other countries.
Now Calgary companies are left wondering how the move will affect their bottom lines.
At the Tool Shed Brewing Company, the owners are preparing for a jump in the price of their aluminum cans that come from the U.S.
“One of the affordable luxuries I think is beer,” co-owner Jeff Orr said. “So for us to keep piling on more cost to the consumer is not fair either. We will look at that when it happens. I’m sure we’ll have a meeting very quickly to find out what we’re going to do to react to this.
“But we’re certainly not in a place where we can start stockpiling 40 truckloads of cans.”
Orr says there’s not much they can do about the rising costs of their cans.
“The joke around here is that the beer is the cheapest thing in the can. The can, the lid, the label, the packaging — that’s very expensive and so we can control, to a certain extent, the price and availability of our staff to make the product cheaper but when someone else is supplying the outer packaging, it’s really hard to deal with.
Orr says the tariffs aren’t helping anyone.
“The more tax businesses see, the more decisions we have to make that ultimately hurt the local economy.
“If your decision is: ‘We have to keep canning beer and we don’t have the cash to hire another person to help us out,’ then that’s a job loss,” Orr said.
People in the market for new appliances could also be faced with higher costs. Canada’s list of targeted items include not only a 25 per cent tariff on steel and aluminum products but also surtax on a range of consumer goods including dishwashers, washing machines and fridges.
“Unfortunately I think it will put the percentage of whatever it is back on to the consumer like a lot of other goods out there,” said Adam Vanderleest, manager of Coast Appliances Calgary South.
Canada’s retaliatory tariffs are in response to U.S. president Trump’s tariffs on Canadian steel and aluminum that kicked in June 1.
“Right now the president doesn’t listen to economic reasoning or rational logic evidence,” said University of Calgary Economist Eugene Beaulieu.
“But once it starts hitting his companies and firms and consumers, maybe things will change.”
Beaulieu says the tariffs are going to cost both American and Canadian businesses and consumers. He said Canada can’t go tit for tat with the U.S. forever but said Ottawa needed to fight back.
“I think you have to be impressed with Canada’s approach. It was a very professional and very considerate approach and took over a month to consult with businesses and other key stakeholders to make sure we are targeting the right goods.
“Because you want to minimize the economic impact on Canadians. And you also want to maximize the political impact in the U.S.,” Beaulieu said.
Beaulieu says so far the tariffs on nearly $17 billion worth of American imports only represents about three per cent of our imports from the U.S. He says the concern now for consumers is if this trade dispute spills over into other sectors such as automobiles.
“I guess the hope is this is not the beginning of a trade war but maybe diplomacy and negotiations will happen,” Beaulieu said. “That’s a risk. It’s a risky place we are in right now.”