Canadian grocery giant Loblaw is ready to speed up the way it handles price increases, to make it easier for suppliers to recoup tariff costs in the event a trade war with the U.S. breaks out next week, according to a letter obtained by the Star.Â
Normally when a supplier wants to increase their prices, Loblaw requires 12 weeks to evaluate the request.
But the company is cutting that wait time in half for tariff-related price increases, recognizing the “unique and dynamic nature of the situation,” Loblaw told suppliers last week.Â
The letter offers a glimpse behind the scenes in the food industry, as companies scramble to prepare for the worst next week when U.S. President Donald Trump’s 30-day pause on his tariff threat is set to expire.
If he follows through, Ottawa is likely to retaliate with tariffs on U.S. goods entering Canada.
As the letter lays out, it could take weeks for tariffs to ripple through the supply chain and impact shoppers at a major chain like Loblaw. (The impact will be felt faster in areas like the auto sector where experts have warned that tariffs could bring the entire industry to a halt within days.)
“There’s still a lot we don’t know, but we’re doing everything we can to lessen possible impacts,” Loblaw spokesperson Catherine Thomas said in an email, adding that the letter was meant to “reassure” suppliers.
Michael Graydon, who runs a lobby group for food manufacturers, has often been critical of Loblaw’s treatment of suppliers, but on Wednesday, he called the move “a bit of an olive branch.”Â
“Six weeks is still too long, but it’s better than 12,” said Graydon, CEO of Food, Health and Consumer Products of Canada, adding that he hadn’t heard of other retailers announcing similar concessions. “So I think they are making an effort.”
Graydon said some suppliers with shelf stable products could be stockpiling goods now, so they can ride out the first few weeks of a trade war without having to pay tariffs.
For suppliers of fresh products, who don’t have the luxury of stockpiling, they’ll have to pay tariffs immediately, even though they won’t be able to increase wholesale prices with major chains for weeks.
Canadians shouldn’t expect large increase in food costs in event of Trump trade war, food
They could make up for losses during those weeks by factoring them into the eventual price increases later, or the supplier could take the hit to their profit margin, he said.
“Everybody is just sort of riding it out,” Graydon said, “trying to figure out what the hell is going on.”
In the letter, Loblaw said suppliers would have to show how tariffs impacted their products to qualify for an expedited price increase. If Loblaw accepts the increase, the new price would kick in within six weeks on the “closest Sunday.”
But it could take even longer for the increases to show up in stores. When a supplier increases the wholesale price it charges a retailer, it doesn’t necessarily mean the retailer will instantly alter the shelf price.
Regardless, Canada’s smaller grocers won’t get any sort of grace period when it comes to cost increases, and will just have to accept new prices whenever their suppliers tell them to, said Gary Sands, senior vice-president of the Canadian Federation of Independent Grocers.
“Independents don’t have the same leverage as Loblaws,” he said.  Â
In a quarterly update last week, Loblaw CEO Per Bank told financial analysts that U.S. suppliers only account for roughly 10 per cent of Loblaw’s overall cost of goods.
He said consumers have already shifted their buying habits in response to Trump’s threats, driving up sales for Canadian-made goods.Â
Tasked with devising a game plan for pc28¹ÙÍøto respond to U.S. President Donald Trump’s tariff
Other food executives and academics have also pointed out that a trade war would likely have a muted impact on grocery bills in Canada — at least at first.
Before Trump agreed to a pause on his tariff threat earlier this month,  of 25-per-cent counter tariffs on $30 billion worth of American goods — the first phase of a broader, $155-billion tariff plan.
Executives said much of the American food on that list could be easily replaced by Canadian-made versions, or imports from other countries.
But some, including Bank, have warned that if Canada adds more American fruit and vegetables to the list, it will be hard to find enough replacements elsewhere.Â
With files from Josh Rubin
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