How Canada's retaliatory tariffs affect your hotel

Canada will be moving to implement tariffs on goods from the U.S., effective July 1. You may not be aware that several items affected by the proposed 10 per cent tariff are things used in your hotel.

By Jason Cheskes

The trade relationship between the United
States and Canada has been one of the top global news stories over the past
weeks.  While we optimistically held our
breath as the G7 leaders headed to Charlevoix earlier in the month, the result was evident as soon as
President Trump logged onto Twitter as he flew off to Singapore. Unless
something changes quickly and dramatically, Canada will be moving to implement its
own tariffs on goods from the US, effective July 1.  Trade
wars have various victims, but ultimately it is the consumer who suffers.  

What you may not be aware of, is that
several items the proposed 10 per cent tariff affects, are things that are used in your hotel.
It’s important to realize that while you may be purchasing from a Canadian
supplier, manufacturer, or distributor, some of the items you buy from them
will still be subject to the tariffs and you may not yet be aware what is
sourced through the U.S.  

Typically, when
the cost of goods to supplier or distributor increases, they pass the full percentage impact of the increase onto the consumer to maintain the margin. What this
means, is that with several categories of items coming from the U.S., hotels will
see a 10 per cent increase in price.

While the list below is not exhaustive, it
is illustrative of items of items you may be purchasing. The proposed list released by Canada’s
Department of Finance, (https://www.fin.gc.ca/activty/consult/cacsap-cmpcaa-eng.asp)
contains several items that hotels use and with the busy summer months upon us,
it’s well worth a review to consider how to mitigate the impact of these costs
before they are seen on your invoices.

Be sure to review the list and if you are
unsure of the source of any products you are purchasing, consult with your
suppliers to determine if alternate products to those facing tariffs are
available or what they are going to do if the tariffs proceed.  

You may want to consider increasing stock of
non-perishable supplies on the list if applicable, such as garbage and laundry
bags, tablecloths and napkins, bed frames, bedding, tissue and toilet paper along
with ballpoint pens. Orange juice that
is frozen or concentrated (as per the type in dispensing machines) is not on
the current tariff list, but ready-to-drink product is. Almost all mattresses
in the industry are made in Canada however any using US steel to make them, will
be subject to potential cost escalations.  If it’s coming from the US, it’s time to
consider a Canadian source as soon as practical.

Hopefully prior to July 1,
things between Canada and the U.S. in these matters will be resolved, but with
the threat of automobiles being added to the U.S. import tariff list, discussions
in Canada and elsewhere are of expanding the items subject to tariffs in retaliation,
not a resolution.  It’s a good time to
invest the time to review your purchasing in these areas.

Several paper goods are already on the list,
and printed items including Brand specific signage, and other items that are often
advocated to be sourced from U.S. suppliers by the brands, will likely be next.
As for why Maple Syrup is on the list, and something that Canadians would buy
from the U.S. ($22M source-Gov’t Can.), that just seems very un-Canadian. In the
meantime, you may want to stock up on bourbon, as it could be a very long
dispute.

Jason Cheskes, president of Above the Line Solutions, has over 25 years experience as both an operator and vendor. He was the first non-operator ever to serve as president of the ORHMA, for the Greater Toronto Region. He specializes in vendor and operator partnerships, strategic sourcing and contracting, sales training and development and strategic company planning.