Canada’s tariff response unlikely to spike inflation, economists say
Inflation outlook steadies rate expectations
Bank of Canada Governor Tiff Macklem said Sept. 2 that inflation risk is on the rise, with higher energy costs topping Canada’s incoming dollar-for-dollar tariffs on US goods as the biggest potential driver of rising prices for consumers and businesses. In a statement, the central bank said upside risks to inflation have increased while new tariffs make growth prospects more uncertain, adding that further US tariffs could jeopardize the sustainability of Canada’s economic recovery.
Loblaw Cos. Ltd. chief executive Per Bank told The Canadian Press that the limited scope of the new duties is “good news” for consumers.
“Last year, more than 5,000 food and non-food products were affected, generally at tariffs of around 25%. This time, we expect roughly half as many products to be impacted and very few food products,” he said, adding that the impact “will also be more concentrated” in health and beauty categories, including fragrance, makeup and hair-styling products, as well as paper goods.
Desjardins principal economist Florence Jean-Jacobs wrote in a report Tuesday that counter-tariffs “are therefore unlikely to put significant pressure on food inflation and should help grocery retailers and food service operators avoid squeezed profit margins.”
She noted that tariffs the US has imposed on Canadian exports could also leave more domestic supply available to Canadian retailers.
