2025-01-28
Buying Groceries During a Trade War
This post is a two-for-one: first, a hot take on what Canada's response to Trump's tariff threats should look like, and second, a quick guide on how to 'buy Canadian' most effectively.
Tariff response
With just a few more days until Trump's tariffs are scheduled to kick in, there's obviously been a lot of discussion among Canadians as to what our response should be.
I've seen suggestions that are all over the map:
- matching the 25% tariffs on imports from the US (would make Canadian workers have to pay more for a wide range of goods)
- strategic, targeted tariffs on specific, politically important US goods and/or sectors, especially those where Canadians have other buying options (of all the 'retaliatory' options, this sounds like it results in the least amount of self-inflicted pain)
- 200% tariffs on Tesla EVs (thank you Charlie Angus)
- Ask Elon Musk to open a Tesla factory in Canada (GFY Pierre Poilievre, who suggested this)
- Cut off all energy and mineral exports to the US to punish regular everyday US citizens who will no longer be able to get certain medical treatments or keep the lights on (yes, to my dismay I have seen this suggested; it's extremely cruel, and gives Trump a reason to paint Canada as the enemy)
- Beg Trump to exempt a specific industry so that one particular region of Canada experiences no disruption, but the rest of the country has its negotiating position undermined (GFY Danielle Smith)
Regardless, the overarching consensus is that *our government must respond with retaliatory counter-measures*. And ok, look, I'm not some kind of expert in statecraft, and I don't have a team of economic analysts at my beck and call who can give me a rapid-fire rundown on the impact of tariffs on each sector. But part of me wonders if this is mostly just a knee-jerk 'if they hit you, hit them back' reaction, as opposed to good strategy.
After all, Trump's tariffs are going to raise prices for people in the US. But a surprising number of people in the US don't actually know what a tariff is[1] and will want to point the finger at someone when prices go up. Wouldn't it be good to undercut Trump's nationalist rhetoric by *not* giving him an excuse to blame Canada?
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This isn't to say that we should do nothing. Trump's tariffs will hurt Canadian workers who are making export goods, for example. So obviously we need to make sure they're taken care of.
Beyond that, my personal view is that we should see this crisis as an opportunity: to increase food security and sovereignty, strengthen our relationships with other trading partners, expand the public sphere with the manufacture of things like vaccines, generic pharmaceuticals, and renewable energy systems, along with building public infrastructure like high-speed rail and social housing.
In other words, focus on the things that the Trump admin is likely opening up space for, and things that help build the world we want.
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What we *shouldn't* do is throw our hands in the air and claim to not have the money to pay for these things. As any student of Modern Monetary Theory[2] knows, a country that issues its own currency can always pay for anything that is for sale in that currency.
That's not to say there can't be consequences for doing so. But anyone still talking about budget deficits as 'inherently bad' the in the year 2025 is either misinformed, or is deliberately misinforming you.
Stephen Harper, for example, is doing the latter when he takes a swipe at MMT[3] in between white nationalist dog-whistles and attacks on civil rights advances.
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Ultimately what I'm hoping to point out is that there's a fine line between reasonable self-defense on the one hand, and jingoist rhetoric and policy that hurts all of us - whether you're in Canada or the US! - on the other.
And personally, I think there's a completely reasonable, non-jingoistic case for buying Canadian-made goods where possible, given the current situation: in this moment, we can help insulate Canadian workers from any demand shocks brought about by Trump's tariffs.
How to 'buy Canadian'
First off, country-of-origin labels are a bit different for food vs. non-food items. So let's look at each individually:
Food origin labels
The most important distinction here is between the labels "Product of Canada" and "Made in Canada".
Product of Canada:
A label that says "Product of Canada" or "Canadian" is the strongest of the claims. For produce, this means it was grown in Canada, obviously. For prepared foods, it means that at least 98% of the ingredients (by weight) were grown in Canada, and that all the processing and labour was Canadian.
Made in Canada:
A "Made in Canada" claim is a bit more complex. The Canadian Food Inspection Agency (CFIA) website[4] describes it all in much greater detail, but the key points are:
- The last "substantial transformation" of the product must happen in Canada (the example the CFIA gives is using cheese, sauce, and dough to make a frozen pizza)
- There must be a qualifying statement alongside the "Made in Canada" claim, e.g. "Made in Canada from domestic and imported ingredients" or "Made in Canada from imported ingredients".
There are other specific claims that companies can make, and these are considered fine as long as they're true, such as "Roasted in Canada" for coffee that's been roasted in Canada. Pretty straightforward.
Or, there may be claims about an ingredient, such as "made with Canadian tomatoes" or "contains Canadian tomatoes". These statements might sound ambiguous - like, you can imagine a company using two Canadian tomatoes in a production run and making a "technically true" weasel-word claim - but no, these types of claims are regulated too, and in both of these cases, 100% of the tomatoes have to be Canadian-grown.
However: some claims, such as "Canada Organic", or "Canada Fancy Grade", don't refer to a food's origin, only that it meets a certain standard.
Some country-of-origin rules end up going into a lot of detail. One such rule:
"Meat from imported hatching eggs, including those hatched in transit, would meet the "Product of Canada" guidelines provided that the chick was raised, slaughtered and processed in Canada."
In other words, it's considered to be a Canadian-born hen as long as the chick was already in the mail. (Ba-dum tiss)
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Non-food origin labels
Non-food items are covered under the Consumer Packaging and Labelling Act (CPLA) and the Textile Labelling Act (TLA) and are enforced by the Competition Bureau.[5]
Similar to food labels, the main claims are "Product of Canada" and "Made in Canada", but the requirements are a bit different.
Product of Canada:
"Product of Canada", in this case, still means at least 98% 'Canadian content', but this is measured as a % of the total direct manufacturing costs, which include materials and labour.
Made in Canada:
A "Made in Canada" claim is similar to the one for food products: the claim requires a qualifying statement, and the last "substantial transformation" of the product must occur in Canada. What's different is that the product must also contain at least 51% 'Canadian content' to qualify.
And like with food products, it's also fine for companies to make specific claims, as long as they're true (for example, "sewn in Canada with imported fabric").
One interesting thing about these rules is they don't just get interpreted literally. They can also be enforced using a "general impression test", sort of a vibes-based determination of whether or not a company is breaking the rules by heavily implying a product is Canadian, even if they're not explicitly making the claim.[6]
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Enforcement
You might wonder how strictly these rules are enforced, or how often companies get caught breaking the rules.
And there doesn't seem to be much publicly available information about this. The Competition Bureau's website only lists cases going back to 2015, and it's unclear what portion of cases are ultimately made public.
So all we have is a single case from 2016, where a company called Moose Knuckles[7] was using a "Made in Canada" claim without a qualifying statement, even though some of their parkas included imported components.
The end result was an out-of-court consent agreement whereby Moose Knuckles donated $750,000 to charity, along with a few other conditions, including the use of qualifying statements where required.
At the time, that was actually the maximum allowed penalty for a first offense; since 2022 the cap has gone up to either $10 million ($15m for additional violations), or "three times the value of the benefit obtained from the deceptive conduct", whichever is greater.
The Competition Bureau, in other words, isn't messing around, and it's pretty safe to assume that a "Product of Canada" or "Made in Canada" claim is true.