As Canada and the U.S. engage in an ongoing trade battle, many Ontario businesses are currently resisting the urge to pass on tariff costs to their customers. However, experts question how long this can last in a challenging economic landscape marked by rising prices on both sides of the border.

Chapman’s Ice Cream: A Commitment to Stability

One of the most prominent examples is Chapman’s Ice Cream, a family-owned business that has been churning out beloved ice cream flavors since 1973. Faced with rising ingredient costs and the need to sever ties with American suppliers, the company has made a bold commitment to absorb any immediate price increases for the remainder of the year. In their latest Facebook update, they underscored their dedication to keeping prices stable for their loyal customer base.

Precision Record Pressing's Stand

Similarly, Precision Record Pressing, a leading vinyl pressing plant in Burlington, stands firm against price hikes during these turbulent times. CEO Shawn Johnson has committed to preventing "additional charges, price increases, or hidden fees," aiming to protect music lovers from the impact of tariffs.

Expert Insights

Experts like Dan Kelly, the president and CEO of the Canadian Federation of Independent Business (CFIB), observe that these businesses are part of a minority group. He notes, "For most companies, absorbing these costs is too significant a hit. In time, if tariffs remain, I suspect they will begin to pass costs onto consumers in some form." A recent CFIB survey highlighted that only two out of ten small businesses believe they can hand off all tariff costs, while a mere one in ten is prepared to take on the entire financial burden.

Impact of Retaliatory Tariffs

Notably, retaliatory tariffs imposed by Canada could have a more pronounced effect on businesses than those from the U.S. For instance, at least one Toronto brewery has indicated a need to increase beer prices by roughly ten cents per can due to a 25% retaliatory tariff on aluminum that went into effect recently, following similar actions by U.S. officials.

Soccer World Central's Approach

Amidst this, Soccer World Central, an Oakville and London-based retailer, has taken another approach, determined not to profit from what they call "a terrible act." Owner Chrys Chrysanthou, with three decades of experience as a CPA, is focused on keeping prices manageable and avoiding excess markups on products affected by tariffs. While they cannot absorb all the costs, they are committed to ensuring customers don’t feel the full brunt of any price adjustments.

Managing Price Increases

Chrysanthou explained that a $20 product could potentially rise to $25 due to tariffs, but they are keeping planned increases capped at $22.50 to lighten the burden on consumers, asserting, "We just don’t feel it’s right to profit off of this situation."

Looking to the Future

However, the lasting impact of these tariffs remains uncertain. Experts caution that while some businesses have managed to hold off on raising prices, an extended trade dispute without resolution may force them to reconsider. Kelly advises businesses to maintain transparency with customers to foster trust and minimize surprise price increases in the future.

As Ontario grapples with these economic pressures, the resilience of local businesses highlights both the challenges they face and the lengths they are willing to go to protect their customer base during these trying times. Will consumers continue to enjoy stable prices, or will the pressures of tariffs lead to inevitable price hikes? Only time will tell as the trade landscape evolves.