Tariff price hikes may take time to hit shelves as retailers work through inventory

Canada’s retaliatory duties — ranging from 15 to 50 per cent on nearly $28 billion worth of American products including carpets, electronics and clothing — prompted U.S. President Donald Trump on Tuesday to ban imports of certain Canadian goods starting Sept. 29.

The tit-for-tat trade war between Canada and the United States is widely expected to leave consumers on both sides of the border paying more for everyday goods.

Yet Canadian shoppers may be briefly insulated from the full impact of the trade dispute as tariff costs are negotiated and shared along the supply chain, experts say.

Businesses may also temporarily absorb some of the cost by accepting smaller profit margins, they say.

“A 50 per cent tariff does not automatically produce a 50 per cent increase at the cash register,” said Andreas Schotter, an international business professor at Western University’s Ivey Business School.

While the importer writes the first cheque, the tariff cost is then negotiated along the supply chain, he said.

“The American supplier may lower its price, the Canadian importer or retailer may accept a smaller margin and the customer may pay more,” Schotter said. “In most cases, the burden will be divided among them.”

While the divvying up of the surtax will lead to consumers paying more, he agreed that higher prices likely won’t hit store shelves immediately.

“Most consumers will see a lag as existing inventory is sold and more expensive shipments arrive,” Schotter said. “Goods already sitting in Canadian warehouses or stores were imported at the old cost.”

The first noticeable signs of the counter-tariffs are likely to be fewer promotions and less product choice as retailers replace American goods with Canadian or overseas alternatives, he said.

Once higher prices kick in, they may not be lowered to pre-tariff levels as soon as trade tensions ease, said Queen’s University economics professor Beverly Lapham.

“The problem with these kinds of tariffs is that once prices go up, they don’t tend to fall back down even when the tariff is removed,” she said. “These price increases get entrenched.”

Even temporary tariffs may have a long-term effect on inflation and consumers’ purchasing power, Lapham said.

Meanwhile, price increases do not affect all Canadians evenly, she said.

“Tariffs are going to hurt the Canadian consumer and it’s going to be very disproportionately felt by lower-income people,” Lapham said. “The pain is not going to be spread evenly across consumers.”

A Bank of Canada report last spring found that Canadian counter-tariffs of 25 per cent imposed on a range of American goods in 2025 resulted in about a six per cent price increase on tariffed goods.

“A pass-through rate of one-quarter of Canada’s counter-tariffs closely matches estimates of tariff pass-through to consumer prices in the United States,” the May 2026 report said.

It also found that “retailers’ expectations matter.”

“Announcements about tariffs — even those not directly targeting Canada — can trigger rapid price adjustments by affecting how long retailers expect tariffs to last,” the report said.

This report by The Canadian Press was first published Sept. 9, 2026.

Brett Bundale, The Canadian Press

by The Canadian Press

Tariff price hikes may take time to hit shelves as retailers work through inventory

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