Paul Martin commentary
When Donald Trump first began imposing tariffs on goods imported to the US, the initial response to its trading partners was to impose counter tariffs. Canada did that about 14 months ago on a list of specific items.
But a half year later, we lifted those counter-tariffs because it was clear we were just hurting ourselves. Tariffs imposed by our government were paid by Canadians even though it felt like we were penalizing the Americans.
Now, nearly a year later, the Bank of Canada has released a study examining how Canadian retailers handled those counter-tariffs… did they absorb them or pass them along to consumers.
It turns out a bit of both. Canada imposed a 25-percent tariff and about six-percent or one-quarter of the levy was passed through to consumers as business ate the bulk of the hit.
Interestingly, firms that offered similar Canadian-made products did not raise their prices through this period, preferring to remain more competitive than those selling imported products. And it took just a few months to return to normal after the counter-tariffs were lifted.
