Is everyone but me ‘looking the other way’ over observations from industry observers that the Trump Tariffs could kill small- and mid-sized Canadian food brands? Or Is there still confusion about how the current tariffs work?
Innovative, scrappy, small businesses will be among the first to
throw in the towel as the pressures of Trump tariffs and
Canadian counter-tariffs become too much to bear…
I’ve tried to educate myself about where the tariffs situation currently stands. But I’m sad to say, many folks – including me, until now – still don’t know how the (im)balance of trade is affecting businesses on both sides of the border…
Everybody’s hurting
I think most Canadians know that the trump Tariffs are making Canadian goods costlier for Americans to buy. But many Great White Northerners are unaware the Canadian Government has placed retalia-tory tariffs on many US goods. Making them more expensive for Americans to buy.
The problem is, those Canadian goods may be suffering a double whammy. Not only are ingredients, packaging and other components of the Canadian products being taxed coming into Canada (via the retaliatory tariffs), the finished goods are being taxed again when they re-enter the US as imports.
What about the easement?
Yes… The US has eased its tariffs on goods from Canada that comply fully with the provisions of the Canada-United States-Mexico trade agreement. But the Canadian retaliatory tariffs may still be taxing their components on their way into Canada in the first place…
Larger manufacturers have built-in backstops involving long-term contracts and the length of time it takes products to move through the supply chain. But smaller businesses have to be more nimble to deal with fluctuations in supply and demand.
According to a recent Food In Canada report, “industry insiders say some smaller Canadian food man-ufacturers may not be able to weather the storm much longer.”
‘Not much longer’, may translate to ”three to six months’, says Henry Chambers, Senior Vice-President for Canada and the Americas at UK-based consulting firm Sentinel MC.
“I think you may see some companies just not making it,” agrees Michael Graydon, CEO of the Food, Health & Consumer Products of Canada Association.
For example…
Brad Woodgate runs three different Canadian companies, making dietary supplements, sugar-free foods, and specialty beverages. He feels small Canadian enterprises like his are being unfairly pe-nalized by their own government through retaliatory tariffs.
“What’s going to happen is the biggest multinationals that can withstand these tariffs, like the Pepsis, the Cokes, the Gatorades, the Heinz, the Kraft, Unilevers, they’re all going to absorb these losses longer than the small, mid-sized companies. The small, mid-sized companies will all go bankrupt,” Woodgate predicts.
Brown says there is a whole complex of intertwined issues businesses like his have to navigate to survive. For example, supermarkets and other retailers are reluctant to negotiate price increases with manufacturers. And both manufacturers and retailers must remain mindful of ‘how much of a price hike consumers will accept’.
My take
The deck is, indeed, stacked against small, specialized Canadian food product manufacturers. Their only hope may be that Trump and Co. abandon their crazy tariffs program all together before the ‘heads begin to roll’…
~ Maggie J.