I landed in Toronto yesterday, where conversations about America’s northern neighbor facing economic aftershocks from potential Trump policies are already brewing – months before any possible implementation. Walking through St. Lawrence Market this morning, I couldn’t help but notice the fresh produce prices that might soon reflect a new economic reality.
Loblaw Companies Ltd., Canada’s largest food retailer, issued a stark warning this week that Donald Trump’s proposed tariff regime could drive up grocery prices for Canadians if implemented after his January inauguration. The warning signals how deeply interconnected North American supply chains remain, despite recent efforts to build economic resilience.
“If these tariffs come into effect, they will inevitably flow through to higher costs across the border in Canada,” said Per Bank, Loblaw’s CEO, during a quarterly earnings call. The executive emphasized that while the exact impact remains difficult to quantify, the consequences would be tangible for Canadian consumers already struggling with food affordability.
The former president’s campaign promises included sweeping tariffs of 10-20% on imports from all countries, with an escalated 60% tariff specifically targeting Chinese goods. These proposals have sent economic analysts scrambling to model potential inflation scenarios across North America’s integrated marketplace.
Loblaw’s warning carries particular weight given Canada’s agricultural relationship with the United States. According to Agriculture and Agri-Food Canada, the country imported approximately CAD $29.8 billion in agricultural products from the U.S. in 2022, with fresh fruits and vegetables comprising a significant portion during winter months when domestic production slows.
The Bank of Canada, having recently cut its key interest rate to 4.25% in an effort to stimulate economic growth, now faces the prospect of imported inflation potentially undermining its monetary policy objectives. Deputy Governor Sharon Kozicki acknowledged the concern in remarks to the Economic Club of Canada last week.
“Cross-border supply chain integration means policy decisions made in Washington inevitably impact Canadian inflation metrics,” Kozicki noted. “We’re monitoring these potential developments closely.”
For average Canadians like Melissa Thornton, a Toronto mother of three I spoke with at the market, the prospect of higher grocery prices feels like a cruel twist after finally seeing some relief at checkout counters.
“We’ve just started to catch our breath after two years of food inflation,” Thornton told me while selecting apples. “Now we’re being told prices might jump again because of politics happening south of the border? It’s exhausting.”
Canadian food inflation peaked at 11.4% in 2022 but has gradually moderated to 2.1% as of September 2023, according to Statistics Canada. Any reversal of this trend would disproportionately impact lower-income households, who typically spend a larger portion of their budgets on essentials.
The Canadian Produce Marketing Association estimates that nearly 80% of fresh fruits and vegetables consumed in Canada during winter months are imported, with the majority coming from the United States. This dependence makes the sector particularly vulnerable to Trump’s proposed tariff policies.
Ron Lemaire, CPMA president, expressed particular concern about the timing. “Winter is when Canadian consumers are most exposed to import pricing. Adding tariffs during this period could mean significant sticker shock at grocery stores from December through April.”
Economic modeling by the C.D. Howe Institute suggests that a 10% blanket tariff on U.S. imports could add approximately 1.2 percentage points to Canada’s inflation rate within the first year of implementation. This would represent a significant setback for the Bank of Canada’s inflation targets.
The potential grocery price increases come as Loblaw itself faces heightened scrutiny over its profits during the inflation crisis. The retailer reported a third-quarter profit of $621 million, up 15.1% from the same period last year. This performance has fueled criticism that major grocers have used inflation as cover for price gouging – accusations Bank firmly rejected during the earnings call.
Finance Minister Chrystia Freeland has remained measured in public comments about Trump’s proposed trade policies, emphasizing Canada’s ongoing work to strengthen economic resilience.
“Canada-U.S. trade is the most successful economic relationship in the world,” Freeland stated during a press conference in Ottawa. “We’re focused on maintaining that productive relationship while protecting Canadian economic interests.”
Beyond the grocery aisle, Canada’s broader economy faces complex challenges from potential U.S. tariffs. TD Economics estimates that a full implementation of Trump’s tariff proposals could reduce Canadian GDP growth by 0.4 to 0.7 percentage points in 2025.
As I finished my reporting at St. Lawrence Market, butcher Dave Menzies offered perhaps the most straightforward assessment I heard all day: “Politics is politics, but people still need to eat. Someone’s going to pay for these tariffs, and it won’t be the politicians.”
For Canadian consumers, already weary from years of inflation challenges, that someone appears likely to be them – an economic reality that transcends the border separating them from their southern neighbor’s political decisions.
