Trade Wars

 I was in an LCBO yesterday afternoon and was browsing beers when I saw an employee busy stocking shelves with an American beer - possibly Michelob or Old Milwaukee. My first thought was "that's not going to last long" but then I realized that almost all the beer by the American big brewers sold in Ontario are brewed and bottled in Ontario. The US beers that would be affected by Ford pulling US products from LCBO shelves would mainly be craft brews, or craft adjacent. (Samuel Adams and Sierra Nevada are imported, but Budweiser and Coors are Ontario made. (Goose Island is from Quebec.)) Vice-versa, Molson is Molson-Coors these days, and the headquarters is in the US, so Molson beers are in the same category. (Labatt's is technically Belgian, as part of AB InBev.) (Their product is crap as well, but for now I'm avoiding talking about quality.)

 

Which raises a question. There are plenty of "American" products produced in Canada by wholly-owned subsidiaries. Sometimes this dates back to pre-NAFTA times and has merely continued and in some cases it involves simply being easier to manage fairly large volumes by regional production. (Heinz Ketchup took out advertisements a week or so ago to point out that their Canadian ketchup is made in Canada. So is Coca-Cola.)

 

If the aim of avoiding purchasing American in favour of Canadian products is based on immediate flows of money, the purchase of Coke or Heinz or, for that matter, Molson Canadian is sending much of the money to Canadian workers and Canadian suppliers to those companies[1], but there is still a flow of profits to the US parent. A real "buy Canadian" campaign aimed at pressuring American business interests means buying local, and typically from smaller producers. (And more expensive ones, typically: cheap cat food comes from American sources like Purina, and the Canadian brands like Acana/Orijen are among a higher-priced set of products.)

 

[1]Inputs are another matter. Craft beers, for example, are made with a wide variety of hops, some of which have a single source - so even though they are usually guaranteed to be fermented, bottled, and sold locally they usually have by definition an international aspect.

 

Sometimes you can't tell where something comes from. Many products made for Loblaws or other grocers' in-store brands merely say "made for" and gives the grocer's name but not the place of manufacture, or who did the manufacturing. Blue Label Peanut Butter says"Processed in Canada" but that leaves open the possibility that the raw materials could come from anywhere. Their Water Crackers have no source - it just gives Loblaws' address, not the manufacturer's.

 

This is not specific to own brand labels: neither PC nor Classico sauces have a "Made in" statement. But it it a reasonable though not certain inference that a product from a Canadian manufacturer is likely to be sourced in Canada, but no such inference can be drawn from a brand of a retailer, which sells products from all over the world.

 

If you want to buy Canadian, your best bet aside from really diligent research is to buy from smaller specialist stores, more likely to be locally owned; to buy not only "Canadian" but local (sometimes from non-local chains: Whole Foods has a policy of sourcing from and highlighting local products[2]); and to be ready to pay more than a baseline amount for the products in question, except for agricultural goods in season, where local will tend to be cheaper.

 

[2]There's a small dilemma: Whole Foods is better along a whole set of axes (labour, ethical sourcing) than Loblaws or some of its other competitors[3], but it is emphatically US-based.

 

[3]The local Whole Foods is close to a Longo's: this is a local chain which started as an Italian immigrant grocery store and grew. It is partly-owned by the founding family and partly by the chain which owns Sobeys; it's essentially a competitor in Loblaws' space, i.e. neither discount nor luxury. There are a number of brand-name products carried by both Longo's and Whole Foods. It is my experience that these are almost always cheaper at Whole Foods. They have a reputation of being expensive because they don't carry cheap food, but their markups do nut seem to be exceptionally high.

 

The perspective changes if we shift to "boycott US" instead. Then we can look at goods from elsewhere - which is arguably what we should be doing: strengthening ties with non-US trading partners. For the next four years, we're all in this together.

 

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On the political front, it's clear that Trump wants tariffs simply because he likes tariffs, and that his pointing to the (small, apparently) traffic in fentanyl across the border is a veil over his dislike of the US trade deficit with Canada. The main check on Trump (other than the real but not certain possibility that his action will be found to be illegal - there are several reasons that this is arguably ultra vires) is that the markets, which had previously been treating the tariff threat as a negotiating tactic, will react badly enough that Trump pulls back. He does pay attention to the stock markets.

 

On our side of the border, the current headlines talking of a "possible trade war" understate it: my estimate is that a leader who did not retaliate in what was perceived to be a strong manner would be severely punished in public opinion, at the metaphorical level of being strung up on a lamppost - and there are elections coming up. Neither Ford nor Trudeau can be seen as neglecting to hit back.