BoC report estimates U.S. counter-tariffs pushed prices up about 6% last year

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The boost added about 0.3 percentage points to headline inflation last year, according to the report. The annual pace of inflation largely floated around the Bank of Canada’s two per cent target in 2025.

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Substitutes for tariffed goods sourced domestically or imported from non-U.S. markets meanwhile saw no significant price hikes compared with the control group over the same time.

The report said the bulk of those higher prices on tariffed goods fell back in line with the control group three months after Ottawa removed most of the counter-tariffs in September.

The analysis found that retailers’ perceptions of how long the trade dispute would last affected the pace at which they hiked prices.

For instance, one appliance retailer in the study saw prices spike in the days after April 2, 2025 — “Liberation Day” in the United States when Trump ratcheted up his global tariff campaign — despite the fact that Canada’s counter-tariffs had been in place for a month by that time.

“When firms expect a tariff to be short-lived, they absorb most of the cost. When they expect a tariff to last for some time, they pass some of it on to consumer prices,” analysts concluded.

Researchers found products that were flagged to shoppers as being subject to tariffs were also more likely to sport higher prices than tariffed goods that didn’t advertise the impact of duties.

The tariff banners helped shift the burden of price increases off the retailer itself, the Bank of Canada analysts said.

“This reduces the risk of customer backlash and gives retailers more room to pass through cost increases, which is what appears to have occurred in 2025,” the report read.

Most Canadian goods are still able to enter the United States tariff-free thanks to the Canada-U.S.-Mexico agreement on trade. U.S. tariffs on steel, aluminum, autos and other key industries remain in place.

Canada continues to levy counter-tariffs on select steel, aluminum and U.S.-made autos that don’t comply with CUSMA, and imposes tariffs on global steel imports above certain quotas.

This report by The Canadian Press was first published May 11, 2026.

Craig Lord, The Canadian Press