August 26, 2026
JackCA/Depositphotos.com
What Do New US-Canada Tariffs Mean For Retailers & Consumers as Trade Talks Collapse?
With the recent collapse of trade talks between the U.S. and Canada, both President Donald Trump and Prime Minister Mark Carney seemingly at odds following the failure of recent negotiations, tariffs hikes on both sides of the border have been announced.
The United States has planned $20 billion in new tariffs to be added to those existing, targeting products including vehicles and automotive parts — and Canada has laid out its dollar-for-dollar $20 billion tariff strategy targeting the U.S. targeting dairy, seafood, steel, and farm equipment, among other items, per Forbes. And while the tariffs enacted by President Trump went into effect August 22, the retaliatory tariffs promised by Prime Minister Carney come into effect on September 8.
As Forbes senior contributor Sharon Edelson highlighted, U.S. retailers and consumers are bracing for the impact generated by additional tariffs.
“For U.S. shoppers, the fallout will be seen at the checkout as retailers decide how much of the added costs they can absorb before passing them on to consumers,” Edelson wrote.
“This comes at a particularly sensitive time for shoppers, who have prioritized saving money. As more customers gravitate to Walmart and Target, it’s not just the value-oriented who are concerned about price, but even those earning $100,000-plus annually,” she added.
While the overall sums involved may appear relatively modest, the greater issue of ongoing — or even increasingly — volatility brought on by a variety of factors, including trade and tariff policies, seems to be of the most concern to analysts. John Mercer, head of global research and managing director of retail research at Coresight, spoke to the notion that consumers had become much warier, holding their wallets tighter as price increases and general inflation continue to exert pressure. Couple that with retailer anxieties over the same 15 to 18 months of “unpredictability and volatility,” and uncertainty seems to be the term to describe the near future for both businesses and shoppers.
As President Trump imposes tariffs on goods from around the world, China is casting itself as the champion of free trade.
Canada’s decision to impose retaliatory tariffs on U.S. products, becoming the second nation to do so, drew praise from the first. https://t.co/cbveXSDSY7
— The Washington Post (@washingtonpost) August 26, 2026
Others cited by Edelson — Marcus Shen, CEO of B-Stock; and Jonathan Gold, VP for supply chain and customs policy for the National Retail Federation — remain bullish about retailers’ prospects around inventory management.
“Years of trade issues have made retailers more resilient, Shen said, noting that it’s nonetheless created ups and downs from both the supply and demand perspectives,” Edelson wrote, also noting that, per Shen, the added cost of tariffs would have to be eaten by one party down the line — whether the manufacturer, distributor, or consumer.
“One round of tariffs has been replaced with another, but retailers will be well-stocked for the coming holiday season. Retailers know how to adapt to shifting situations and are well prepared to meet consumers’ demand for affordability and choice,” Gold said, reinforcing the notion that retailers weren’t exactly new to this paradigm.
Canadian Consumers See Second Resurgence of ‘Buy Canadian’ Sentiment Following New Tariffs
On the Canadian side of the equation, shoppers are redoubling previous efforts to purchase Canadian-made products, with retailers and manufacturers increasingly taking great pains to label said items whenever possible. Major grocer Loblaws has once more added “T” logos to items impacted by tariffs, while continuing to feature maple leaf iconography to signify Canadian products on store shelves.
“Margaret Chapman with Narrative Research says the buy Canadian movement is becoming entrenched in shopping habits as trade tensions worsen and consumers look for ways to support the local economy,” The Canadian Press reported, via CTV News.
“She says polling has shown many shoppers are willing to pay more for Canadian products, a trend that is likely to gain momentum as the trade war intensifies,” the report added.
BrainTrust
Shep Hyken
Chief Amazement Officer, Shepard Presentations, LLC
Marcos Póvoa
Jeff Sward
Founding Partner, Merchandising Metrics
Recent Discussions
Discussion Questions
Do you expect these new U.S.-Canada tariffs, and retaliatory tariffs, to remain in place for long? If not, why not, and if so, what’s your reasoning?
How much impact do you believe U.S. manufacturers, retailers, and consumers will feel from the new tariffs? Is it more of the same, or will this latest round cause deeper pain?
Poll
The tariffs are bad news all round. They’re bad for exporters and they’re bad for those that want to import goods to sell or to manufacture something with. Both things are ultimately bad for consumers as they result in higher prices. And if anyone doubts the cost of tariffs, just look at the size and scale of the tariff refunds now being issued. Of course, firms on both sides of the border will adapt and find workarounds, but they shouldn’t really have to.
Well not all around: I’ve no doubt many will find employment – albeit temporary! – being hired to sort out and process all the paperwork involved. 🙂
Can’t we get AI to do that, or has that not yet made its way to the government bureaucracy? In any case, you’ve provided truth to the old adage: it’s an ill wind that blows no good!
The tariff is rarely the cost that hurts most – the volatility is. A known rate can be planned, priced, and sourced around. A rate that changes every few weeks creates the strain on the process and feels like the deeper pain. But, tight paperwork keeps companies from paying a tariff they don’t owe, so build up that back office muscle.
The right plan is one built around volatility being permanent. The rates may not last, but the whiplash will.
No one wins in a trade war, especially a pointless one. Consumers who are incensed at prices will look forward to weighing in in November.
The escalation in the tariff dispute will only add to consumer and retailer anxieties. As unpredictability and volatility continue to ramp-up, so too will cost which in many cases will be lumped on to an already exhausted consumer. While it’s hard to quantify exactly what these new tariffs may do to pricing in specific categories, it’s the bigger picture that needs attention. Tariffs and prolonged trade disputes create uncertainty, raise costs and undermine confidence. At a time when consumers are already tightening spending, this latest escalation only adds more pressure.
I’ve learned it’s foolish to expect much of anything…except, of course, more chaos.
SO much Winning II
A two-week wait for retaliatory tariffs leaves the door open to reason things out amid consumer and industry backlash.
Years of inflation have squeezed retailers, brands and consumers on both sides of the border. These new tariffs make electronics, grocery, home, apparel, health & beauty and sporting goods even more expensive.
Many products in the home category are subject to this round of tariffs. More consumers may postpone their renovation plans, which would affect home improvement giants and their network of professional contractors.
Here we go again… Tariff anxiety and confusion. In addition to higher prices for consumers, manufacturers, retailers, and all businesses in between will lose confidence and hold off on important long-term decisions. Uncertainty is worse than knowing. It’s impossible to create a tariff strategy is you don’t know what’s happening next week, next month, or even next year.
Anxiety! The administration’s tariffs are supposed to generate new investment in U.S. industry. If tariffs were really driving new investment, we’d expect to see gains in factory construction spending (in real terms). Yet there’s no sign (yet) of a factory building boom. Instead of high tariffs accompanying strong domestic output growth, the industries powering the recent US manufacturing expansion—computers/electronics and aerospace—are those facing the lowest tariffs:
These rounds of tariffs have been going on long enough that retailers have built some resilience around it, but the consumer on the other end has less cushion than they did a year ago. The question for retailers is how long they can hold prices before passing the cost on, and how much of that the consumer can actually absorb right now.
How long can they hold prices? Surely a bad strategy. Worse, prices will ultimately rise not just to cover the tariff’s absolute cost but also to include the manufacturer’s and retailer’s targeted margin.
I do not expect these tariffs to endure because the economies are too closely linked. Yet the harm may outlast them.
The clearest compounding effect is in autos and assembled goods. Parts can cross the border more than once before final sale, so duties at each stage can exceed a single import charge. This does not apply equally to dairy, alcohol or many finished goods.
Consumers will not bear every added dollar. Exporters may lower prices while suppliers or retailers accept smaller margins, leaving shoppers to pay only what the market can sustain. The split will vary by category and bargaining power.
If tariffs appear durable, companies may place final assembly and new supplier capacity in the country where the product is sold. Future investment is more likely to move than existing factories. Retailers and manufacturers should map product-level duty exposure before changing sources or making long-term capacity commitments.
This latest round of tariffs could create deeper pain because it does not just raise costs. It makes retailers choose between raising prices, cutting margin, or narrowing assortment before they know how customers will respond.
The biggest impact may show up in buying decisions. Retailers may delay purchase orders, reduce exposure in tariff-hit categories, or shift volume to products with more predictable margins. That protects the P&L, but it can also leave customers with fewer choices.
Retailers are more prepared than they were in earlier tariff cycles, but preparation does not remove the trade-off. The winners will be the ones that protect price trust without letting tariff uncertainty weaken availability, newness, or product quality.
From a consumer goods planning perspective, the shelf price is the last lever to move, not the first. When input costs jump, the sequence I have seen repeatedly is pack architecture first (grammage, multipacks, a defended entry price point), then promotional depth and mix, and only then list price, and each of those steps lands in the store as a different operational problem. So the visible impact through the fourth quarter will look less like a price shock at checkout and more like assortment churn and constant shelf resets, which is harder to see and harder to manage. On the Canadian side, Buy Canadian is an execution question before it is a marketing one, since origin flags and tariff labels have to be correct across tens of thousands of facings, and without systematic measurement that kind of shelf level compliance rarely clears two thirds. On duration, automotive tariffs are political and therefore reversible, but the planning damage is already booked: 12 to 18 months of re-forecasting is a real cost even if the tariffs disappear in six. Retailers who instrumented their shelves during the last round of disruption will absorb this quietly, and the rest will discover their exposure one out of stock at a time.
I slightly disagree with the “last lever”. I believe, for a retailer, it depends on the item’s price elasticity. If the consumer is price sensitive, the retailer will wait until the last minute. If the item is more inelastic, they will increase the price to cover the anticipated new cost (including margin).
Fair point, Gene, and elasticity is exactly the right lens. I’d frame it as complementary rather than opposing: elasticity decides how fast list price moves, but even for inelastic items I’d argue the retailer still reaches for pack architecture and mix first, because those protect the psychological price points and the promotional calendar that took years to train the shopper on. On truly inelastic, low-substitution items you’re absolutely right, they’ll pass the cost through quickly. Where I’ve seen it get expensive is the middle of the curve, where teams raise list price on items that were more elastic than the model assumed, and then spend two quarters unwinding it at the shelf. So maybe the real answer is that the lever order is set by how confident you are in your elasticity read, and most of the pain comes from getting that read wrong.
If only this whole conversation was actually about trade talks and tariffs. Trade talks collapsed because they degenerated into imbecilic political nonsense. (And nonsense doesn’t even come close to describing it.) This one is going to leave scar tissue. It’s not about math any more. It’s about trust. Some very real emotions have been tapped. New decisions are being made, at the lowest level of consumer purchasing and the highest level of government relationships. It’s not like we can mine our own aluminum. Or just plant a couple more trees. Or build new power plants in New England in the next couple of months. And for what…?!? I think I’m going to start looking for “T” logos and maple leaf icons on the shelves where I live. I’ll pay a little more to buy Canadian.
Truly, to your comment, “It’s not about math anymore. It’s about trust.” “Trust” is easily lost and hard, or even impossible, to regain. Sadly, not even a change in the U.S. administration will ever put America in the blind trust column when discussing economics or even geopolitics. And why should it?
Holiday inventory is largely committed. The pain lands in execution: retailers absorb cost increases on orders they cannot unwind, with margin compression baked in before the season starts. Beyond pricing, the real damage is organizational. Supply chain teams that spent 18 months rebuilding resilience are now re-forecasting again. That operational burden compounds regardless of whether tariffs last six months or three years.
The “Buy Canadian” wave is real and durable for most shoppers. The maple leaf is a signal, not a specification, and proximity is enough for the majority. The risk is reputational: one viral exposure of label-versus-reality turns a sentiment wave into a credibility problem (remember New Balance ‘made in USA’ campaign). If this cycle runs long enough, Canadian retailers may find the supply chain reconfiguration outlasts the tariffs that triggered it. Some paths, once established, approach irreversibility.
“Canadian retailers may find the supply chain reconfiguration outlasts the tariffs that triggered it. Some paths, once established, approach irreversibility.” Supply chains are complete and, once established and efficient, will not change. This is not just about Canadian retailers. This is about global trade..
I’m not sure where this is going. Nobody “wins” trade wars. The administration’s mindset on tariffs contradicts over 200 years of economic history. For all, free trade works; tariffs don’t. We can argue degree for all but not the outcome.
One of the challenges facing the U.S. in this case is that, on one side, we have Mark Carney, Canada’s Prime Minister and a prominent economist. He holds a BA from Harvard and a master’s and PhD in economics from Oxford. Spent 13 years at Goldman Sachs in various international roles. He previously served as Governor of the Bank of Canada (2008–2013) and as the first non-British Governor of the Bank of England (2013–2020), earning international acclaim for his handling of major financial crises.
On the other side, we have Donald Trump and his team.
This makes for a rough road ahead in retail costs and commerce on both sides of the border. The customer will be the ultimate loser, however. The small amount of hope and good news exists in that Americans and Canadians will still find any and all loopholes to keep working together. There’s too many years of embedded trust and partnerships from the past to not keep commerce working, even as they endure the damage from these trade disputes.
More Discussions
How Can Grocers Lock In Loyalty As Nearly Half of Americans Show a Lack of Preference?
What competitive or service-level levers can grocers use to reignite customer loyalty, if any?What Needs To Change For Old Navy (if Anything) as it Gets a New CEO?
Can Old Navy keep doing business as it has in the past?Is the Carhartt / NFL Partnership an Easy Win for Both Parties?
Does the Carhartt / NFL partnership have natural synergy?
The tariffs are bad news all round. They’re bad for exporters and they’re bad for those that want to import goods to sell or to manufacture something with. Both things are ultimately bad for consumers as they result in higher prices. And if anyone doubts the cost of tariffs, just look at the size and scale of the tariff refunds now being issued. Of course, firms on both sides of the border will adapt and find workarounds, but they shouldn’t really have to.
Well not all around: I’ve no doubt many will find employment – albeit temporary! – being hired to sort out and process all the paperwork involved. 🙂
Can’t we get AI to do that, or has that not yet made its way to the government bureaucracy? In any case, you’ve provided truth to the old adage: it’s an ill wind that blows no good!
The tariff is rarely the cost that hurts most – the volatility is. A known rate can be planned, priced, and sourced around. A rate that changes every few weeks creates the strain on the process and feels like the deeper pain. But, tight paperwork keeps companies from paying a tariff they don’t owe, so build up that back office muscle.
The right plan is one built around volatility being permanent. The rates may not last, but the whiplash will.
No one wins in a trade war, especially a pointless one. Consumers who are incensed at prices will look forward to weighing in in November.
The escalation in the tariff dispute will only add to consumer and retailer anxieties. As unpredictability and volatility continue to ramp-up, so too will cost which in many cases will be lumped on to an already exhausted consumer. While it’s hard to quantify exactly what these new tariffs may do to pricing in specific categories, it’s the bigger picture that needs attention. Tariffs and prolonged trade disputes create uncertainty, raise costs and undermine confidence. At a time when consumers are already tightening spending, this latest escalation only adds more pressure.
I’ve learned it’s foolish to expect much of anything…except, of course, more chaos.
SO much Winning II
A two-week wait for retaliatory tariffs leaves the door open to reason things out amid consumer and industry backlash.
Years of inflation have squeezed retailers, brands and consumers on both sides of the border. These new tariffs make electronics, grocery, home, apparel, health & beauty and sporting goods even more expensive.
Many products in the home category are subject to this round of tariffs. More consumers may postpone their renovation plans, which would affect home improvement giants and their network of professional contractors.
Here we go again… Tariff anxiety and confusion. In addition to higher prices for consumers, manufacturers, retailers, and all businesses in between will lose confidence and hold off on important long-term decisions. Uncertainty is worse than knowing. It’s impossible to create a tariff strategy is you don’t know what’s happening next week, next month, or even next year.
Anxiety! The administration’s tariffs are supposed to generate new investment in U.S. industry. If tariffs were really driving new investment, we’d expect to see gains in factory construction spending (in real terms). Yet there’s no sign (yet) of a factory building boom. Instead of high tariffs accompanying strong domestic output growth, the industries powering the recent US manufacturing expansion—computers/electronics and aerospace—are those facing the lowest tariffs:
These rounds of tariffs have been going on long enough that retailers have built some resilience around it, but the consumer on the other end has less cushion than they did a year ago. The question for retailers is how long they can hold prices before passing the cost on, and how much of that the consumer can actually absorb right now.
How long can they hold prices? Surely a bad strategy. Worse, prices will ultimately rise not just to cover the tariff’s absolute cost but also to include the manufacturer’s and retailer’s targeted margin.
I do not expect these tariffs to endure because the economies are too closely linked. Yet the harm may outlast them.
The clearest compounding effect is in autos and assembled goods. Parts can cross the border more than once before final sale, so duties at each stage can exceed a single import charge. This does not apply equally to dairy, alcohol or many finished goods.
Consumers will not bear every added dollar. Exporters may lower prices while suppliers or retailers accept smaller margins, leaving shoppers to pay only what the market can sustain. The split will vary by category and bargaining power.
If tariffs appear durable, companies may place final assembly and new supplier capacity in the country where the product is sold. Future investment is more likely to move than existing factories. Retailers and manufacturers should map product-level duty exposure before changing sources or making long-term capacity commitments.
This latest round of tariffs could create deeper pain because it does not just raise costs. It makes retailers choose between raising prices, cutting margin, or narrowing assortment before they know how customers will respond.
The biggest impact may show up in buying decisions. Retailers may delay purchase orders, reduce exposure in tariff-hit categories, or shift volume to products with more predictable margins. That protects the P&L, but it can also leave customers with fewer choices.
Retailers are more prepared than they were in earlier tariff cycles, but preparation does not remove the trade-off. The winners will be the ones that protect price trust without letting tariff uncertainty weaken availability, newness, or product quality.
From a consumer goods planning perspective, the shelf price is the last lever to move, not the first. When input costs jump, the sequence I have seen repeatedly is pack architecture first (grammage, multipacks, a defended entry price point), then promotional depth and mix, and only then list price, and each of those steps lands in the store as a different operational problem. So the visible impact through the fourth quarter will look less like a price shock at checkout and more like assortment churn and constant shelf resets, which is harder to see and harder to manage. On the Canadian side, Buy Canadian is an execution question before it is a marketing one, since origin flags and tariff labels have to be correct across tens of thousands of facings, and without systematic measurement that kind of shelf level compliance rarely clears two thirds. On duration, automotive tariffs are political and therefore reversible, but the planning damage is already booked: 12 to 18 months of re-forecasting is a real cost even if the tariffs disappear in six. Retailers who instrumented their shelves during the last round of disruption will absorb this quietly, and the rest will discover their exposure one out of stock at a time.
I slightly disagree with the “last lever”. I believe, for a retailer, it depends on the item’s price elasticity. If the consumer is price sensitive, the retailer will wait until the last minute. If the item is more inelastic, they will increase the price to cover the anticipated new cost (including margin).
Fair point, Gene, and elasticity is exactly the right lens. I’d frame it as complementary rather than opposing: elasticity decides how fast list price moves, but even for inelastic items I’d argue the retailer still reaches for pack architecture and mix first, because those protect the psychological price points and the promotional calendar that took years to train the shopper on. On truly inelastic, low-substitution items you’re absolutely right, they’ll pass the cost through quickly. Where I’ve seen it get expensive is the middle of the curve, where teams raise list price on items that were more elastic than the model assumed, and then spend two quarters unwinding it at the shelf. So maybe the real answer is that the lever order is set by how confident you are in your elasticity read, and most of the pain comes from getting that read wrong.
If only this whole conversation was actually about trade talks and tariffs. Trade talks collapsed because they degenerated into imbecilic political nonsense. (And nonsense doesn’t even come close to describing it.) This one is going to leave scar tissue. It’s not about math any more. It’s about trust. Some very real emotions have been tapped. New decisions are being made, at the lowest level of consumer purchasing and the highest level of government relationships. It’s not like we can mine our own aluminum. Or just plant a couple more trees. Or build new power plants in New England in the next couple of months. And for what…?!? I think I’m going to start looking for “T” logos and maple leaf icons on the shelves where I live. I’ll pay a little more to buy Canadian.
Truly, to your comment, “It’s not about math anymore. It’s about trust.” “Trust” is easily lost and hard, or even impossible, to regain. Sadly, not even a change in the U.S. administration will ever put America in the blind trust column when discussing economics or even geopolitics. And why should it?
Holiday inventory is largely committed. The pain lands in execution: retailers absorb cost increases on orders they cannot unwind, with margin compression baked in before the season starts. Beyond pricing, the real damage is organizational. Supply chain teams that spent 18 months rebuilding resilience are now re-forecasting again. That operational burden compounds regardless of whether tariffs last six months or three years.
The “Buy Canadian” wave is real and durable for most shoppers. The maple leaf is a signal, not a specification, and proximity is enough for the majority. The risk is reputational: one viral exposure of label-versus-reality turns a sentiment wave into a credibility problem (remember New Balance ‘made in USA’ campaign). If this cycle runs long enough, Canadian retailers may find the supply chain reconfiguration outlasts the tariffs that triggered it. Some paths, once established, approach irreversibility.
“Canadian retailers may find the supply chain reconfiguration outlasts the tariffs that triggered it. Some paths, once established, approach irreversibility.” Supply chains are complete and, once established and efficient, will not change. This is not just about Canadian retailers. This is about global trade..
I’m not sure where this is going. Nobody “wins” trade wars. The administration’s mindset on tariffs contradicts over 200 years of economic history. For all, free trade works; tariffs don’t. We can argue degree for all but not the outcome.
One of the challenges facing the U.S. in this case is that, on one side, we have Mark Carney, Canada’s Prime Minister and a prominent economist. He holds a BA from Harvard and a master’s and PhD in economics from Oxford. Spent 13 years at Goldman Sachs in various international roles. He previously served as Governor of the Bank of Canada (2008–2013) and as the first non-British Governor of the Bank of England (2013–2020), earning international acclaim for his handling of major financial crises.
On the other side, we have Donald Trump and his team.
This makes for a rough road ahead in retail costs and commerce on both sides of the border. The customer will be the ultimate loser, however. The small amount of hope and good news exists in that Americans and Canadians will still find any and all loopholes to keep working together. There’s too many years of embedded trust and partnerships from the past to not keep commerce working, even as they endure the damage from these trade disputes.