How Canada-U.S. trade is sneaking into your grocery bill (infographic)

Canada’s economy is deeply connected to the world, but our biggest trade partner is the United States. In 2024, 76% of Canada’s exports went to the U.S., and 49% of our imports came across the southern border.¹

Think of it like this: As neighbours, Canada and the U.S. have historically shared both finished products and raw materials. This means that if one neighbour raises prices or charges extra fees for an item, the other neighbor ends up paying more, too.

For instance, two bakeries on either side of the U.S.-Canada border might share egg and flour suppliers, and then also sell their specialty baked goods to each other. If the cost of a shared ingredient rises, they each pay more to produce their baked goods. They raise the cost of the finished product accordingly, so their customers — like you — end up paying more. 

Although the U.S. is our top import and export partner, Canada trades heavily with countries around the world. Here’s a detailed look at what we import and where the products we export go.

In 2024, Canadian exports amounted to $780.8 billion, with the U.S. being one of the largest players, capturing 76% of the Canadian export market. The tables below show the top Canadian exports and their percentage of total export value. 

^{HS Code is a standardized international system used to classify traded goods for customs, tariffs, and trade statistics.}

^{Note: Percentages are approximations based on available data.}

In 2024, the Canadian imports amounted to $765.7 billion dollars, again with the U.S. leading the imports market, representing nearly 50% of total imports. 

^{HS Code is a standardized international system used to classify traded goods for customs, tariffs, and trade statistics.}

^{Note: Percentages are approximations based on available data.}

As you can see from the tables above, the U.S. plays a significant role in Canada's trade activities, both as a primary importer of Canadian goods and as a major exporter to Canada. Understanding this and other relationships is crucial for comprehending the dynamics of Canada's economy and its dependency on specific trade partners.

Trade isn’t just about finished products — it’s also about parts and raw materials that cross the border multiple times during the production process before turning into something we buy. 

If extra costs — like tariffs — are added each time a product crosses the border during production, the final product costs more for Canadians.

A tariff is a tax on imported goods. If the U.S. or Canada adds tariffs, businesses pay extra fees to import products. They often pass these costs onto consumers, who end up with higher grocery bills, pricier electronics and more expensive cars. 

Inflation happens when prices rise over time, making goods and services more expensive. This can be caused by:

• Higher production costs (like energy and labor)
• Supply chain disruptions (COVID-19, natural disasters, wars)
• Increased demand (when too many people want the same product)

For example, a rise in grocery store prices impacts more than your dough. The cost of making a pizza went up dramatically in 2022³ due to an increase in the cost of ingredients:

• Flour: +23.2%
• Cheese: +9.9%
• Vegetables: +11%

Events like droughts, floods and conflicts in major exporting countries affect supply chains, also driving up costs. For example:

• Droughts in California have impacted the price of fruits and vegetables imported to Canada.
• Wars affecting oil-producing countries have caused gas prices to rise.
• Supply chain disruptions (like the 2021 typhoon in Malaysia) led to a worldwide semiconductor shortage.⁴

Tariff news has been fast and, at times, furious. Here are some key dates for what’s transpired this year:

• April 3 — The U.S. introduces a 25% tariff on Canadian imports. However, goods that meet USMCA rules (like sufficient North American content) are partially exempt.⁵
• April 9 — Canada responds with 25% retaliatory tariffs on U.S. vehicles that don’t meet USMCA standards, and on non-Canadian/Mexican content in otherwise compliant goods.⁶
• April 15 — Canada introduces a temporary 6-month exemption (until October 2025) for essential goods — including some food ingredients — to help ease the impact.⁷
• August 1 — The U.S. raises tariffs to 35% on non-USMCA imports from Canada and adds a 40% penalty for transshipped goods.⁸

When it comes to tariffs, they impact large-scale trade along with affect everyday grocery items. When multiple ingredients cross the border before a product is made, tariffs stack up, leading to higher grocery prices for Canadian consumers.

For illustrative purposes, let’s look at a box of cookies and a car to show the impact tariffs have on what goes into them and their final cost.

Tariffs aren’t just trade policy. They can even affect the cost of a chocolate chip cookie in Canada. Let’s break down how recent tariff changes between Canada and the U.S. could impact what you pay at the checkout.

A simple box of cookies can have ingredients that cross the Canada-U.S. border multiple times before reaching store shelves. The table below shows how many times certain cookie ingredients could cross the border before you can enjoy the treat.

Let’s turn those well-travelled ingredients into a box of 12 premium chocolate chip cookies typically sold in Canada for $5 to see what happens to that price if tariffs are applied under a few rules.

Some things to keep in mind:

• Ingredients make up about 35% of the retail price, or $1.75.
• Around half of those ingredients — chocolate chips, sugar, dairy and nuts — are vulnerable to U.S. cross-border tariffs.
• Tariffs only apply to the exposed portion.

Example: Decadent Chocolate Chip Cookies

As you can see, even small tariffs on ingredients can ripple through to the final price of everyday products. Depending on how ingredients are sourced and how exposed they are to cross-border tariffs, the retail price of a single cookie could rise by 10 to 20%.¹⁰

While Canada has introduced temporary exemptions for essential goods to help soften the blow, the long-term impact will depend on how trade tensions evolve.⁷

Car manufacturing is highly dependent on cross-border supply chains — vehicles and their parts can cross the border as many as eight times before final assembly. Below is a table showing how car parts move through the manufacturing stage before the whole vehicle is assembled and ready to be sold. 

NOTE: As of July 2025, auto parts compliant with CUSMA are exempt from tariffs between the United States and Canada. This example is purely illustrative. We will continue to monitor the situation and update this source in a timely manner to reflect the latest developments.

For now, vehicles that meet USMCA requirements aren’t hit with the full 25% tariff when crossing into the U.S.

Here’s how that works:

• If a car is assembled in Canada, the U.S. or Mexico and meets the USMCA rules of origin¹¹ (at least 75% North American content and certain labor standards), it’s mostly in the clear.
• Only vehicle parts that originate outside of North America are subject to tariffs.
• Automakers (OEMs) can use USMCA documentation to prove compliance and minimize tariff exposure.

Canadians can’t control global events, but we can take steps to minimize costs. Below are some steps you can take to lower the effect on your wallet — and don’t worry, they aren’t the usual suggestions to skip your morning latte.

Understanding how Canada and the U.S. are economically tied can help you — and all Canadians — make wise financial decisions. While we can’t control tariffs, inflation or global crises, we can adjust our shopping and spending habits to protect our wallets.

By staying informed and adapting strategies you could try to manage the impact of rising prices.