Most grocery items have escaped the wrath of trade tensions as Canada’s reciprocal tariffs took effect on Tuesday. But economists say some items, such as health and beauty products, could see prices rise in the short term.
“The retaliatory tariffs are not focused on food inflation. So, their direct impact on food prices should be fairly modest,” said KPMG chief economist Ali Jaffery.
About 20 per cent of all items affected are consumer products, Jaffery said, which is small enough to keep a lid on overall inflation in the coming months.
“Tariffs are reasonably well designed to limit both the economic damage, but also the price pressures that Canadians will face,” Jaffery said in an interview.
The federal government’s reciprocal tariffs, ranging from 15 to 50 per cent, apply to imports from the United States on a laundry list of items, including dairy, cosmetics, clothing and textiles, matching the dollar value of duties the U.S. imposed on Aug. 22.
The majority of the retaliatory tariffs are on intermediate inputs, or raw materials that are used in production as opposed to items that consumers see on store shelves. That’s different from last year’s counter-tariffs, which included a broad array of duties on consumer items, such as Florida orange juice.
Most of the U.S. imports targeted by retaliatory tariffs can be swapped out relatively easily since many of those items are also produced within Canada, Jaffery said.
Per Bank, chief executive of Loblaw Cos. Ltd., said the limited effect of reciprocal duties is “good news.”
“Last year, more than 5,000 food and non-food products were affected, generally at tariffs of around 25 per cent. This time, we expect roughly half as many products to be impacted and very few food products,” he said in a LinkedIn post on Monday.
“The challenge is that tariffs on some impacted products could be much higher, reaching up to 50 per cent in certain categories,” Bank said.
“The impact will also be more concentrated, particularly in health and beauty and cosmetics including fragrance, makeup, conditioners and hair styling products but also the paper category will be impacted.”
Loblaw will be reviving its T symbol for tariff-affected items on grocery shelves starting later this month.
Jaffery said there will likely be an adjustment period for retailers as they hunt for substitutions while products that have seen their prices rise from tariffs see a decline in demand.
Consumers will likely avoid items where prices have jumped, such as in the beauty products category, which could push retailers to ultimately reduce the number of U.S. products on their shelves, said Desjardins principal economist Florence Jean-Jacobs.
Meanwhile, tariffs imposed by the U.S. on Canadian imports also mean a drop in sales of those items south of the border -- a silver lining for retailers here as supply builds up domestically, she wrote in a report on Tuesday.
“Counter-tariffs are therefore unlikely to put significant pressure on food inflation and should help grocery retailers and food service operators avoid squeezed profit margins,” Jean-Jacobs said.
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Ritika Dubey, The Canadian Press
This report by The Canadian Press was first published Sept. 8, 2026.
