Prices for canned goods about to go up in Canada as tariffs start to bite

August 1, 2018

Canadians should brace for higher prices on everything from soda to soup as manufacturers begin to feel the impact of the U.S.-Canada trade war and pass on the cost of aluminum and other tariffs to retailers.

PepsiCo Beverages Canada recently advised retailers that it plans to raise its prices by about a penny per can, starting at the end of July.

In a letter sent to retailers in late June, the beverage giant cited tariffs the Canadian government recently implemented on a range of products, including the aluminum that makes the cans that holds the company’s drinks.

Those tariffs were themselves in retaliation for levies the Trump administration put on Canadian metal products, specifically a 25 per cent tax on steel and a 10 per cent tax on aluminum.

“We take costing actions and changes very seriously,” Pepsi’s letter reads. “Due to the business challenges the surtaxes pose, we have determined that we must pass through cost increases.”

Almost 90 per cent of the Pepsi products consumed in this country are made at one of the company’s six Canadian manufacturing plants. But the supply chain criss-crosses the border multiple times, which is how tariffs come into play.

The letter said as of July 31 retailers who sell Pepsi products will pay one cent per can more for those products. Whether stores raise prices for their own customers is up to them.

The company did not respond to multiple requests for comment for this story, but it’s clear Pepsi isn’t the only food company that’s been forced to tackle the tariff question.

In its earnings last week, Coca-Cola CEO James Quincey revealed that it, too, had recently hiked prices for canned beverages across North America.

“Clearly, it’s disruptive for us [and] it’s disruptive for our customers,” Quincey said on a call with analysts to discuss the company’s financial results last week. “But the beverage industry is not the only industry that is facing pressure from changing imports and the need to [change] pricing,” Quincey said.