If you’ve been tuned into the news lately, you’ve likely heard a whole lot about American and Canadian tariffs. Both Trump and Trudeau have announced measures aimed at curbing imports from across the border.
As of the writing of this article, the US has announced 25% tariffs on Canadian steel and aluminum – without exemption. In response, Trudeau has promised retaliatory tariffs against US imports.
As with any hot-button issue, there’s a whole lot of speculation floating around about how these tariffs may impact Canadian businesses – including the restaurant industry. While no tariffs have taken effect just yet (at the time of this article), the proposed changes are set to have a major impact on both countries’ economies.
In our decade of experience as business brokers and restaurant real estate specialists, we’ve seen all kinds of industry changes, economic fluctuations, and other adversities. In this blog, we’ll cover a few important considerations for restaurant owners in light of these developments.
What Are Tariffs?
A tariff is essentially a tax applied to specific products that are imported from another country. There are all kinds of reasons why a country might impose tariffs like increasing income or incentivizing citizens to buy domestic products to boost local industries and economies.
How Will American Tariffs Impact Canadian Restaurants?
Since Canadian restaurants aren’t (usually) in the business of exporting steel and aluminum, most (if any) impact from Trump’s tariffs will be somewhat indirect. However, certain businesses may feel the impact head-on. For example, some craft breweries in Ontario have their products canned in the USA with Canadian-made aluminum. So, if enacted, these tariffs could cause a massive spike in production costs for those breweries.
As a result, the Canadian restaurants that stock products from these breweries may see increased supply costs. This may lead restaurants to get their craft beer elsewhere.
Have questions about Canada’s restaurant industry? Explore these related resources for more insights.
- How Canada’s Seasons Impact the Restaurant Industry
- Pricing and Inflation in the Restaurant Industry
- Is There a Standard Commercial Real Estate Lease in Ontario?
What About Canadian Tariffs?
On the other side of the coin (or if you like, the other side of the border), Canadian tariffs on American goods could also potentially impact restaurant owners. Let’s say that Trudeau levies tariffs on a handful of American-made materials or products. This means it’s going to be more expensive for Canadian manufacturers and suppliers to operate if they’re reliant on certain products from down south. As these elevated costs travel down the supply chain, there’s a chance restaurant owners could be paying a whole lot more for American goods – be it ingredients, kitchen equipment, signage, or something else.
Ideally, there will be Canadian-made alternatives available at a lower cost for everyday restaurant owners. However, nothing is ever guaranteed. We could also see Canadian manufacturers and suppliers lifting prices in response to an elevated demand for domestic goods. Again, this is all speculation so it’s important to take these hypotheticals with a grain of salt.
Changes in Consumer Behaviours
One of the biggest impacts that we’ve seen so far has been a huge swell of support for Canadian-produced goods, anything local is tops right now, and that applies to local restaurants. Very good news indeed.
On the less positive side of things, if Trump’s tariffs do take effect, we will likely see a ripple effect on jobs and the cost of goods, especially in Ontario.
Given the challenges that these tariffs will place on the Canadian steel and aluminum industries, many economists are predicting some degree of layoffs and lost jobs. On top of this, elevated costs along the supply chain could cause Canadians to pay more for everyday goods and services.
With all this in mind, there’s a good chance that many Canadians will be feeling some kind of financial strain. This will no doubt impact how often consumers choose to dine out or order food through a delivery service.
In need of a new space for your restaurant? Explore these blogs for helpful advice.
- Buying a Restaurant? Here Are 5 Questions to Ask
- How to Keep Customers In the Loop When Moving Your Business
- What to Look For When Choosing a Restaurant Space
What Should Restaurant Owners Know?
The bottom line is that right now, nothing is set in stone. Any announced tariffs have yet to take effect and there’s still time for leaders to negotiate. As always, if you have questions or concerns about the restaurant industry or your business, you’ll want to talk to an expert – i.e. a restaurant real estate agent or business broker.
Searching for the right place to bring your business goals to life? We can help! Reach us by email at ryan@carverealestate.com or by phone at 416-618-0054.
