Perhaps lost in the hustle and bustle of the USMCA trade dealings is the fact that Canada did retaliate against the U.S. steel and aluminum tariffs with tariffs of our own on over 40 grocery and food related items.
The full brunt of those tariffs is likely just beginning to be felt at the consumer level, says Kevin Grier, with Kevin Grier Market Analysis and Consulting Inc. The 10% tariff, that hit July 1, 2018, covers things like roasted coffee, licorice, processed beef and more. In the months following, Grier explains, wholesalers, brokers, and distributors have been negotiating with retailers on who foots the 10% bill. Those negotiations wrapped in late 2018, he says, and consumers may start to see increasing costs — or missing items — at grocery stores now.
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Grier also feels that grocers in Canada have temporarily taken a breather in the typically intense competition on pricing which should speak to better margins if it continues in 2019.
In this discussion on food costs and grocery industry dynamics, Grier also speculates that pork products that may have been destined as Father’s Day features and Canada Day front-of-the-flyer ads may being reconsidered in light of the rising African swine fever risk overseas and its eventual impact on hog markets here at home. An increase in retail prices is likely, he says. It may become very difficult to find pork in the second half of 2019 if the ASF issue gets any worse in China as pressure will intensify for Canadians to export instead of supply domestic needs.
For more about grocery dynamics and food inflation, listen below: