How will counter-tariffs impact Canadians? Here’s the potential cost

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However, the latest counter tariffs are instead focused on “intermediary inputs,” such as insulated conductors, construction machinery parts, and freight trailers, to name a few. What this means is that the cost of production for Canadian firms will increase.

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“These companies respond by raising the prices of the products that they sell here at home, and in some cases by laying off workers or shrinking how much they produce. It’s going to hurt the economy more than tariffing consumer products will,” Steinberg said.

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Retail prices

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A Bank of Canada report published in May looked at how retailers adjusted prices during the six months Canada imposed 25 per cent counter tariffs on U.S. products last year. It found that prices for goods that were subject to counter-tariffs increased by about 6 per cent more than those of non-tariffed goods — or roughly one-quarter of the 25 per cent counter-tariff — adding roughly 0.3 percentage points to consumer price inflation.

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However, Loblaw CEO Per Bank shared on LinkedIn on Tuesday that he expects roughly half as many products as last year to be impacted by counter-tariffs, which he says is “good news.”

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The challenge, he added, “is that tariffs on some impacted products could be much higher, reaching up to 50 per cent in certain categories.” The impact will also be more concentrated, he said, in categories including health and beauty and paper.

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“Consumers will not see prices rise in the short term,” Steinberg said of this round of counter-tariffs. “This is going to be a slower burn.”

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Small businesses

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Both Steinberg and Tombe agree that it is Canadian businesses, rather than consumers, that will feel the effects of the counter-tariffs first. In fact, a Canadian Federation of Independent Business (CFIB) survey found that 49 per cent of business owners are affected by the Canadian counter-tariffs, with 28 per cent reporting major negative impacts.

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Affected importers estimated the median monthly financial impact of both the U.S. and Canadian tariffs to be $55,000, with 40 per cent saying they will absorb most of the tariff-related costs.

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And 11 per cent of importers affected by the Canada-U.S. trade war said they would stop being financially viable if the trade war lasts three months or more.

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Jobs

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Tombe previously put Canadian job losses as a result of U.S. 50 per cent tariffs at an estimated 87,200, while Steinberg said he expects Canada’s retaliatory measures to be “at least as harmful as that.”

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Tombe previously told National Post that his estimate amounts to roughly 4 per cent of total employment, which is “not a recession-scale shock, but certainly for the individuals involved, a pretty significant cost to be borne.”

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Federal debt

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At the same time as the counter tariffs were announced, Ottawa also unveiled a $7.5 billion aid package for firms and workers impacted by the trade war.

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Tombe previously told National Post: “If we’re not paying for that through taxes, then we’ll be paying for it through higher levels of public debt.”

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How quickly will Canadians feel the impact of counter-tariffs?

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Unlike the counter-tariffs Canada imposed last year, economic experts agree that it will take longer for Canadian consumers to feel the effects of the current retaliation.

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Tombe said that the immediate hit is felt by businesses instead of consumers “because about 75 per cent of the affected trade will be in the form of industrial supplies and capital goods.”