Three things to buy now to dodge the impact of the tariffs

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Canadians contemplating spending on a new car, home appliance or home renovation might want to pull the trigger sooner rather than later, as the trade war waged by U.S. President Donald Trump threatens to raise the cost of anything from SUVs and refrigerators to plywood and windows.

Canadian businesses and retailers are bracing for impact after the U.S. imposed 25-per-cent tariffs on Canadian and Mexican imports on Tuesday, and Ottawa retaliated by rolling out similar duties on $30-billion of U.S. products. Economists predict a prolonged trade standoff would result in a broad rise of inflation, with companies off-loading some of their added costs onto consumers.

But buying a new car or appliance, or kicking off a home renovation, in the next few weeks might help Canadians dodge at least part of the expected financial hit from tariffs, experts say.

Here’s why it may pay off to pull forward these big-ticket expenses:

Cars

If you need a new car, you might want to head to the dealership now.

The current U.S. tariffs of 25 per cent coupled with Canadian counter-tariffs of the same magnitude could drive up the price of a new vehicle by $5,000-$6,000 on average, according to a recent analysis by research firm J.D. Power.

And that average masks significant differences in how prices might change depending on make and model, said Robert Karwel, director of customer success at J.D. Power in Canada. In general, U.S. automakers, General Motors Co. GM-N, Ford Motor Co. F-N and Stellantis NV STLA-N, along with Japan’s Toyota Motor Corp. TOYOF, Honda Motor Co. Ltd. HNDAF and Nissan Motor Co. Ltd. NSANY, which have built extensive supply chains in North America, are most exposed to the tariffs, he said.

So far, only U.S. tariffs apply to vehicles and parts crossing the Canada-U.S. border, as Canada has largely excluded the auto sector from its immediate retaliation to the Trump trade salvo.

But Ottawa has threatened to expand its tariffs to an additional $125-billion of American products in 21 days if the U.S. levies are still in place by then. And that broader list of targeted goods includes vehicles and parts crossing from the U.S. into Canada.

In most cases, it would likely take one to two months for Canadian inventories of vehicles made before the trade war to run out, Mr. Karwel estimated.

Home appliances

Home appliances are in the crosshairs of both the current U.S. across-the-board tariffs and Canada’s first round of equivalent countervailing duties.

Here, too, the advice is to buy now.

“If you’re on the fence, buying in-stock items immediately will help you avoid price increases,” said Andrew Borsk, a spokesperson for TG Appliance Group, which represents a number of appliance retailers across the Greater Toronto Area. “And taking delivery quickly will help you avoid any potential price increases that stem from inventory being shipped in under the new tariffs.”

Andrew Tepperman, president of Ontario-based furniture and appliances retailer Tepperman’s, estimates it would take about two months to work through the company’s existing inventory.

Mr. Borsk said appliance shoppers have plenty of options to avoid U.S.-made appliances that might see price increases. But over the longer term, a sustained shift in demand away from machines manufactured south of the border could also put pressure on supply across the entire industry, he added.

Homebuilding materials

The tariffs also promise to make building materials more expensive, raising the cost of anything from do-it-yourself home-improvement projects to larger home renovations.

Canada ships a lot of raw materials used in construction – including timber, aluminum and steel – to the U.S. where they’re processed into building supplies and sent back to Canada, making it likely that the inputs would be hit by both U.S. and Canadian duties, said Samuel Roscoe, a professor at UBC Sauder School of Business specializing in geopolitical disruptions and supply chain risk.

Canadian firms, for example, send a considerable amount of raw timber to the U.S. to be sawed and made into lumber used in building and renovations, including plywood and other wood products.

Similarly, semi-finished sheets of steel often travel the U.S. to be turned into structural steel used in building frameworks as well as beams, columns and rebar, steel bars or mesh used to reinforce concrete in buildings.

Additional U.S. levies of 25 per cent on steel and aluminum imports from Canada and other countries, which the White House has said it will roll out March 12, would further add to the cost of cars, appliances and building supplies made of either material.

The U.S. has also announced plans to nearly triple anti-dumping duty rates on most Canadian imports of softwood lumber.