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Report on Business Ottawa’s retaliatory tariffs seen as an opportunity for Canadian industry; minimal impact on consumers

Retaliatory tariffs against U.S. imports are set to go into effect on July 1, but Ottawa’s move to tax specific food products could help Canadian producers boost their market share while minimizing the price impact on consumers here.

The government will impose tariffs of 25 per cent on steel and 10 per cent on food products such as strawberry jam, gherkins and chocolate. Also on the list are circuit boards, toilet paper, motorboats and other goods.

Canada’s dairy and poultry industries are protected by tariffs of 150 per cent to 300 per cent.

CHRISTINNE MUSCHI/REUTERS

The tariffs on food are not expected to increase prices for Canadian shoppers significantly, and those who do not want to pay more will likely be able to find alternatives produced in Canada.

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Sylvain Charlebois, a professor specializing in food policy at Dalhousie University, said many of the products are already manufactured in Canada, while others can be sourced from other trade partners.

“You can easily find a Canadian substitute for every American food product targeted by Ottawa,” Mr. Charlebois said.

Although Canadians might not feel too much impact from the tariffs at first, as the 10-per-cent levy on the listed food products is still moderate, Mr. Charlebois said a price impact could come if the trade war rages on and higher tariffs or embargoes produce a noticeable difference at the checkout.

“What’s interesting is, in some cases, Ottawa is almost encouraging some sectors to redefine their business model and to give opportunity for some investors to look at processing.”

Read more: Canada rallying U.S. politicians, businesses to battle Trump on trade

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Mustard is one of those products. Mr. Charlebois said Canada is one of the largest exporters of the condiment, but buys it back at a much higher price after it has been packaged in the United States.

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He says the tariff could present an opportunity for Canadian businesses to put the mustard in jars and sell it themselves.

Maple syrup and chocolate are two other products that are widely produced in Canada, meaning domestic manufacturers could also benefit.

“[Americans] heavily subsidize their maple-syrup production, giving an unfair advantage to American producers,” Mr. Charlebois said. The tariff will add to the U.S. manufacturers’ costs, making the Canadian product more competitive.

“By slapping a tariff on American producers, then all of a sudden you’re giving a chance for Canadian producers to sell their product.”

Canada imports hundreds of millions of dollars worth of some of these products every year. In 2017, Canada imported $842-million worth of sauces and condiments, $525-million in coffee, and $459-million in chocolate and candy.

Trade values of products

subject to tariff

Customs basis, 2017,

in millions of dollars**

2017 Canadian

trade value

Importing country - U.S.

Tariff

Steel products

25%

$7,205

Aluminum products

10

9,196

Total

$16,401

Importing country - Canada

Steel products

25

$6,287

Aluminum products

10

3,008

Circuit boards

10

1,040

Sauces and condiments

10

842

Thermostats

10

726

Toilet paper

10

670

Household appliances

10

612

Motorboats

10

609

Coffee

10

525

Chocolate and candy

10

459

Plastic bags

10

447

Plastic household articles

10

343

Upholstered wooden seats

10

327

Lawnmowers

10

301

Coated and uncoated paper

10

286

Flavoured water

10

253

Skin creams

10

229

Soups

10

204

Water heaters

10

175

Beef

10

170

Orange juice

10

165

Cans of iron or steel

10

157

Dishwasher detergents

10

121

Room deodorizers

10

121

Pizza and quiche

10

119

Other

10

1,236

Total

$19,432

**Poduct descriptions are illustrative and do not

necessarily reflect official Harmonized

System nomenclature.

JOHN SOPINSKI/THE GLOBE AND MAIL

SOURCE: statistics canada

Trade values of products

subject to tariff

Customs basis, 2017, in millions of dollars**

Importing country - U.S.

Tariff

2017 Cnd. trade value

Steel products

25%

$7,205

Aluminum products

10

9,196

Total

$16,401

Importing country - Canada

Steel products

25

$6,287

Aluminum products

10

3,008

Circuit boards

10

1,040

Sauces and condiments

10

842

Thermostats

10

726

Toilet paper

10

670

Household appliances

10

612

Motorboats

10

609

Coffee

10

525

Chocolate and candy

10

459

Plastic bags

10

447

Plastic household articles

10

343

Upholstered wooden seats

10

327

Lawnmowers

10

301

Coated and uncoated paper

10

286

Flavoured water

10

253

Skin creams

10

229

Soups

10

204

Water heaters

10

175

Beef

10

170

Orange juice

10

165

Cans of iron or steel

10

157

Dishwasher detergents

10

121

Room deodorizers

10

121

Pizza and quiche

10

119

Other

10

1,236

Total

$19,432

**Poduct descriptions are illustrative and do not necessarily reflect

official Harmonized System nomenclature.

JOHN SOPINSKI/THE GLOBE AND MAIL

SOURCE: statistics canada

Trade values of products subject to tariff

Customs basis, 2017, in millions of dollars**

Importing country - U.S.

Tariff

2017 Canadian trade value

Steel products

25%

$7,205

Aluminum products

10

9,196

Total

$16,401

Importing country - Canada

Steel products

25

$6,287

Aluminum products

10

3,008

Circuit boards

10

1,040

Sauces and condiments

10

842

Thermostats

10

726

Toilet paper

10

670

Household appliances

10

612

Motorboats

10

609

Coffee

10

525

Chocolate and candy

10

459

Plastic bags

10

447

Plastic household articles

10

343

Upholstered wooden seats

10

327

Lawnmowers

10

301

Coated and uncoated paper

10

286

Flavoured water

10

253

Skin creams

10

229

Soups

10

204

Water heaters

10

175

Beef

10

170

Orange juice

10

165

Cans of iron or steel

10

157

Dishwasher detergents

10

121

Room deodorizers

10

121

Pizza and quiche

10

119

Other

10

1,236

Total

$19,432

**Poduct descriptions are illustrative and do not necessarily reflect official Harmonized

System nomenclature.

JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: statistics canada

Some of the products Canadian consumers rely on, such as fruits and vegetables, which make up nearly $800-million in imports, were not included in the tariffs. Mr. Charlebois says that is a measured move by the Canadian government to not compromise food security by raising the cost of some of the most-needed products.

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The government still imposed tariffs on orange juice, one of Florida’s best-known exports, and cucumbers, which come mainly from Wisconsin. The two products were chosen to put pressure on legislators running in the upcoming midterm elections in the United States.

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