Prices for groceries may decrease due to the elimination of Canadian counter tariffs
The federal government has made a move that could bring relief to consumers' wallets, as they decide to drop existing 25% tariffs on U.S. goods covered under the CUSMA free trade agreement between Canada, the U.S., and Mexico.
This decision is expected to push the food inflation rate downwards, which currently stands at 3.4%, significantly higher than the normal rate of between 1.5 to 2.5%.
For businesses like Best Sleep Centre, this could potentially lead to a decrease in furniture prices. David Keam, the centre's proprietor, has observed American-made furniture prices skyrocketing due to tariffs, and the removal of these could mean lower prices for various everyday items such as coffee, tea, nuts, spices, dried pasta, sauces, pickles, and items in jars.
The food industry is also set to benefit from this change. Sylvain Charlebois, a visiting scholar at the Faculty of Agriculture and Environmental Sciences at McGill University, believes that the removal of counter-tariffs is a step in bringing the food inflation rate down. He also highlights that a difference of 25% at the border will make a significant impact on prices for many grocery items.
However, the final cost reduction will depend on whether wholesalers choose to eat the tax they paid or ask for a refund. Munther Zeid, owner of Silver Heights Food Fare, anticipates that it will take some time for costs to come down due to existing stock selling first. Zeid's store brought in only one shipment of spices this year, compared to the usual minimum of two, due to increased costs from tariffs.
In the food sector, imported steak seasonings have seen a slowdown in sales due to increased costs caused by tariffs. The cost of each jar of imported spices increased anywhere from $3 to $5 due to tariffs. Zeid hopes that once tariffs return to normal, he might reorder cereal brands that have been in short supply.
The removal of tariffs could potentially lead to a resupply of certain cereal brands that have been in short supply due to managing supply and demand. The shelves of Silver Heights Food Fare are currently empty in certain areas of certain cereals due to managing supply and demand. If a chair cost $100, it now costs $125 due to tariffs, and if it cost $200, it now costs $250.
This news is good for consumers struggling financially, as the decrease in food inflation rate due to the removal of counter-tariffs could mean more affordable groceries and household items. The final impact on prices and restocking of certain items will depend on the actions of wholesalers and how quickly they adjust to the removal of tariffs.
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