Higher dollar? Canadians still paying more than Americans for the same goods
Canadians are paying 20 per cent more on average than Americans for identical products even though the value of the loonie has soared to three-year high above the U.S. greenback, according to according to a recent study by BMO Nesbitt Burns.
That difference was only 7 per cent when the firm conducted a similar study in July 2009, even though the loonie was trading around 92 U.S. cents at the time.
This only confirms what most of know already. Nearly four years after the dollar first hit parity, we’re still paying a big premium on imported goods.
“There has been precious little movement in underlying relative prices in the past two years despite the currency’s record sprint,” Porter says.
But is it that simple?
The American market for consumer goods is quite simply more competitive than in most other countries, Canada’s included, Porter points out. And most Canadian retailers face higher tariffs and taxes compared to their U.S. counterparts.
Some retailers are restricted by contracts under which manufacturers dictate what they can charge in Canada. This so-called 'country pricing' can really make a difference, says the Retail Council of Canada.
But Bruce Cran, head of the Consumers’ Association of Canada, feels this is a bogus argument: “The very simple solution is greed on the part of Canadian retailers. They refuse to pass on the savings,” he told the Financial Post.
"The way we see it, we've been virtually at parity for four years and Canadian consumers have every right to expect more equity in the prices between Canadian and U.S prices," he says.
With just about every economist agreeing that the loonie — fueled by surging commodities prices, a retreating U.S. dollar and the widespread belief that Canada is a financial safe harbour — will stay comfortably above the U.S. dollar for some time to come, this issue isn’t about to go away anytime soon.
How are you taking adavantage of a higher loonie? Have you quizzed local retailers on the topic? How did that work out?
By Gordon Powers, MSN Money
* Follow Gordon on Twitter here.
Posted by: Dunk | Apr 19, 2021 3:58:02 PM
It really is pretty simple. The average US retailer and wholesaler does a lot more volume than their Canadian counterparts. They can afford to work on smaller margins.
Posted by: believer | Apr 19, 2021 4:37:49 PM
If you want to make some CDN/US comparisons try .... http://www.wishabi.ca/cross_border_shopping
Posted by: Steve Sherlock | Apr 19, 2021 5:13:26 PM
I go shopping to the US at least every other weekend. I live in Lasalle near Windsor and you would be foolish not to. Sure it costs me 8 dollars for border crossing but i'll save more then that filling up on the gas. By the time i go shopping and spend an average of 150.00 dollars in groceries per trip i have saved over 100 dollars easy. With the amount of coupons available in the US unlike Canada and the price differance i'm going to go where my money gets the biggest bang.
I recently was looking at a security system with 2 camera's. Found what i was looking for at Home Depot in Canada. Price? 549.99 Went to the Home Depot in Detroit and the same system was 299.99. And no it was not on sale. That was regular price. Come on Canada a 250 dollar price differance ? We still shop in Canada but very rarely.
Until i see a change in grocerie stores in pricing i will continue to go to Detroit. Even eating out over there costs so much less and you have a better variety.
Where i live you would think that is more competition to keep the price down because we are a border town but i just don't see it. The odd sale here or there does not count as savings.
Posted by: Randy | Apr 19, 2021 5:24:57 PM
If the Canadian retailers aren't going to pass on the savings to me (the Canadian consumer) then I am going to take my $$$$ to the U.S. where it is worth more.
Posted by: Super Shopper | Apr 19, 2021 5:36:00 PM
I researched a vacuum cleaner distributed in Canada but had gone to the US website where it was advertised for $1599. When I called to inquire I was told it was $1,750 Canadian. It wasn't difficult to get the lower price from them. It just didn't make sense otherwise
Posted by: waverunner | Apr 19, 2021 6:35:41 PM
We all have our story to tell and I love to save money. You know being canadian it helps out when buying more beer, lobster etc.. But the fact is( still have a job keep buying outside of canada).
Posted by: Trixie | Apr 19, 2021 7:34:59 PM
We will never compete with the USA. We simply can't, per capita. To add insult to injury, we have very high taxes to support a social system that some Canadians claim we need. (I don't. I live a good, healthy lifestyle on my own.) Anyway...the USA has better gas prices, better restaurant prices, better motel prices AND in most cases, better prices and better setups for touring also. (I know. I can't wait until my trip this summer.) Canada will never do it.
Posted by: Steve Sherlock | Apr 19, 2021 7:58:11 PM
Posted by: waverunner Still have a job keep buying outside of canada. What is made in Canada???? Practically nothing.
All my relatives work or have worked and retired from the the big 3. I'm a CNC machinist and my wife does plastic parts. Guess who's paying the company who in hand pays us ? Honda, Toyota, Mitsubishi etc... Very few contracts are from GM Chrysler or Ford.
I have always purchased my cars from the big 3. But if i decide to continue buying my cars from the big 3 then i might as well buy it from the US to save myself some money. Since the big 3 do not want to lower there prices to be more competive with the US. This way i still purchase the same car and yes the big 3 will get there fair share but just not as much from me.
I am sick of seeing and hearing the same crap of still have a job then stop buying foreign etc.. Do you honestly think GM Ford and Chrysler cars are made in Canada? Do your homework. Majority of the cars are made out of Canada. Just because they assemble some cars in Canada and make a few parts here does not make it made in Canada.
Posted by: anyminutenow | Apr 19, 2021 8:44:19 PM
I've bought online from the U.S., plus shipping. Still less than here.
Posted by: Chris | Apr 19, 2021 9:24:14 PM
That's "Canada"!
Posted by: Dollars to Pounds | Apr 20, 2021 4:36:44 AM
The loonie might be trading at a three-year high relative to the U.S. dollar, ... Despite dollar parity, Canadians still pay more than U.S. for ... has found that Canadians still pay far more than Americans for ... The American market for consumer goods is quite simply more competitive than in most.
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Demin Martin
Posted by: Rodd | Apr 20, 2021 8:45:43 AM
It all boils down to the fact that canadians would much rather sit around and feel sorry for our self and complain about things then take a stand, ther are alot of great points made throught this discussion(Bit*h fest). However we as Canadians owe it to ourselves and our children to stop complaining and sack up! insted of blogging/chatting about it DO SOMETHING ABOUT IT! for the most part canadians are very determined and intelligent (for the most part) so again figure out someother way to actually resolve your issue insted of running for a tissue everytime you see corporate bulling! so your kids dont grow up thinking its ok to wine and complain expecting it to resolve ther problem. F
Posted by: PeterD | Apr 20, 2021 10:18:30 AM
An example of Canadian business competition showed itself consistently when I was watching gas prices fluctuate. There were 6 different gas companies marching in exact lockstep with each other. If the price went up a penny you would see them all changing the price at the same time. This is not competition, this is collusion.
Posted by: jim | Apr 20, 2021 11:22:33 AM
I will not buy moist stuff here in canada that can be ordered on line
even when our dollar was lower (in the 85 cent mark ) i was buyiong from the south
parts and product are cheaper in a lot of cases and can save a lot of money when ordered
a few examples would be boat parts and quad and skidoo parts
we are being ripped off here
i do not feel like being loyal to local vendors that charge way to much for their product
If there was a more open mind to making a deal with customer by business owners i would concider doing business here
but i have been told no and that is what we charge and as well the product is a more superiour product
bull s h i t if you order right the product is oem and is just as good as the dealers
this is easy to prove and do if you do the home work once you cna get product at a great price
delivered to your door cheaper then going down town to get it
if yiou are willing to wait 5 days yoiu save money no problem
Posted by: jim | Apr 20, 2021 11:30:03 AM
just a added not to my first comment i live in the middle of alberta and have to rely on delivery to get product
even after i pay for all the differant costs involved i have saved more then 50 percent on a lot of products
here is one example a prop fpor my boat was 350.00 dollars here before tax
i ordered and shipped one to my door from the states with all taxes in and delivery for 85.00
this prop was the exact same prop the dealer was going to sell me. this is an apples to apples comparable
do check the online shopping
most people are afraid of the duties ect. this is not a big issue with most things i have ordered
and i
save a lot of money
Posted by: Jeff | Apr 20, 2021 12:37:50 PM
Just to try and make some of the people here understand how things work there is more to be considered than just the current exchange rate. There are several reasons why some prices in the US are significantly cheaper than here in Canada besides the accusations of "retailer price gouging". Some of these reasons are:
Volume - with 10 times the amount of customers in the US as opposed to Canada the cost per item is naturally lower.
Taxes - In Canada we pay for items like health care in our taxes, in the US the individual pays for them. So perhaps these complainers should ask, would they be willing to pay an average of close to $5,000 a year for health care plus deductables starting at around $1,000 in many cases to save a few dollars here and there?
Manufacturers - Despite the the exchange rate many manufacturers set the price they sell to various countries, unless we produce the goods here we have litte say in what they charge their Canadian customers.
Subsidies - The US has more subsidies for certain products than Canada does (despite their claims to the contrary) and also employ a variety of chemicals in their food production that are not used in Canada. The use of hormones in livestock serve to increase production and reduce costs however what is the long term effect on health?
Finally, I have found many items such as game systems, games, computers, and many other items that are either very close to or the same price as I can find here in Canada. I have also found items here that are cheaper than in the US. Like anything else, you have to know where to shop and be aware of the prices in both countries. You also have to factore in costs for the trip unless, like we do, you combine the shopping trip with another reason for going to the US.
Posted by: Trixie | Apr 20, 2021 4:25:52 PM
Jeff, you've made some great points. However, in the USA, it's actually more about "supply and demand" and there IS more democracy than in Canada. Therefore IF the hormonal products are NOT wanted by the consumer, they will NOT last. I, for one, strongly believe that over time hormonal products will be a thing of the past when the average American consumer becomes more knowledgeable. One such example that I"m thinking of is the TV show done by the British chef, Jamie Oliver. All can learn how to live better by listening to him.
Posted by: shell | Apr 20, 2021 4:42:54 PM
I hate to make this political but seriously Don? Conservatives? The only ones not talking about raising taxes are the problem? I'm not a conservative but that comment simply made me dismiss the rest of your points. As far as taking money away from the less fortunate, give me a break. Close the loopholes in the taxation system and everyone would be better off.
As far as the ACTUAL topic at hand, it is frustrating but I'm not close to the border so I don't have the option to go south and really spending your money there doesn't teach anyone a lesson, it just saves you money.
Posted by: don | Apr 20, 2021 6:00:57 PM
What makes me wonder is that our business taxes are apparently a lot lower (according to all the election hype over the cons lowering business taxes) , our dollar is much higher. The manufacters are global so it is costing them no more to manufacture the product . Shipping from China to Canada cant be that much higher than China to the US. A lot of the products are shipped through US corporations. Add these all together and I do think I am being guoged.
Posted by: Northern Ontario | Apr 21, 2021 4:14:16 PM
There are various reasons, like government subsidies and competition. However, the biggest factor are wages. Manufacturers in the US, pay much less than a similar one in Canada. That means the product can be sold cheaper to retailers. In addition, because of competition, these retailers make lower margins but they have a higher population base to sell to that keeps the till ringing. For example, if you want PRO V golf balls, there will be 6-7 major retailers in the US selling them. Their price is usually $39.99. Let's say you have 100 potential customers so each retailer will get approx. 15 customers each but make $5.00 per box gross profit.
In Canada we only have 1/10th of the population. So we have a potential of 10 customers that will shop at 2-3 major retailers (less competition than the US.) The store sizes are still somewhat the same and Canadian stores have to hold the same amount of inventory to the US (or pretty close). So to be profitable, they need to sell the same product for $59.99. So if they each secure 3-4 customers at $25.00 profit, it comes down to the same amount as the US Retailers who made $5 X 15 customers. I am not saying it's fair but that's reality. For those of you still confused, let's keep it simple.
Let's say you build a highway across Canada funded through our taxes. The width of Canada is the same as the US. You have 340 million people paying taxes in the US and 34 million in Canada. For the same length of road, willl each Canadian pay more in taxes for this project compared to an American? You get the picture