T-Effect: prices rise, even in low-cost grocery stores
TORONTO – The most feared effect of the trade war triggered by the imposition of duties by US President Donald Trump is starting to be felt, and it hurts: the increase in grocery prices. In fact, after an initial period of stalemate – mainly due to the fact that until now there were still goods imported before the “outbreak” of the trade war – now we are entering “regular mode” and the inevitable consequence is that with the increase in reciprocal duties (those imposed by the US and the “retaliatory” Canadian ones) prices will also increase.
This is what the commercial giants themselves say, such as Loblaw, which has announced that a new wave of price increases, directly linked to the Canadian retaliatory duties, is about to hit store shelves. For consumers, this will mean an increase in products marked with a “T” which indicates the goods affected by the tariffs.
Not only that, because, since the trade war is global – and not just limited to North America – , rising prices are also likely to affect low-cost supermarkets like Walmart: Trump’s tariffs on China and other countries threaten the low-price model that is the basis of these companies’ success. The 145% import tariffs on Chinese products, threatened by Trump, were reduced to 30% in a deal announced Monday, with some of the highest duties suspended for 90 days. Retailers and importers had largely stopped shipping shoes, clothes, toys and other items because of the high tariffs, but many will now resume importing from China during the limited window, hoping to avoid empty shelves this fall. Still, many retailers say they will still have to raise prices to offset the costs of the tariffs. They are also bracing for higher shipping costs, fueled by a wave of companies rushing to ship their goods to the United States.
And, as we said, Walmart is not immune and will have to raise prices: in the US it’s already happening. “We will do our best to keep our prices as low as possible, but given the magnitude of the tariffs, even with the reduced levels announced this week, we are not in a position to absorb all of the pressure given the reality of thin margins for retail…” CEO Doug McMillon said.
One retailer has taken action early: Amazon. The online giant imported foreign products before Trump’s tariffs went into effect, and many of its third-party sellers did the same, meaning a good number of them still haven’t changed their prices. But how long can it last?
