Ottawa's retaliatory tariffs a 'punch in the gut' to gluten-free bakery

The owner of a specialized bakery in Winnipeg is surprised at the extent Ottawa's retaliatory tariffs on the United States will hamstring her business.

Betsy Hiebert, who owns Cocoabeans Bakeshop and Cafe on Corydon Avenue, was dismayed to receive a letter last week from her American supplier listing 50 of the brands she buys slapped with a 10 per cent tariff, which came into effect on Canada Day.

She didn't expect so many of her products to be affected by Canada's counter-measures to the tariffs the Trump administration imposed on Canadian steel and aluminum. 

"It felt like a little bit of a punch in the gut, to be honest," said Hiebert, who requires specific ingredients to bake dairy- and gluten-free goods for her customers.

"It took me for surprise because a lot of the ingredients that we use, by nature, are very expensive because it's not something we grow in Canada and so we have to import them," she said, citing a high exchange rate as another blow to business.

"It just feels like we're never going to win."

No substitute

As a specialized baker with sometimes a single source for certain ingredients, Hiebert says they cannot shop around.

And as a small business, they cannot demand lower prices like a big-box store would.

"We're really at the mercy of whatever our wholesalers or distributors decide our price should be."

Her ingredients subject to the new tariffs include soy sauce, Worcestershire sauce, flour blend and various dressings and sauces. ​

Other businesses won't be immediately impacted — at least, not yet, explained Manitoba Chambers of Commerce president Chuck Davidson.

He expects most retailers dealing with the tariffs to eat some of the additional costs early on, Davidson told CBC Manitoba's Information Radio on Monday.

"If you got increased costs from a business perspective in terms of bringing these goods in, it gets passed down to consumers eventually."

He expects the escalating trade dispute to have a snowball effect resulting in bad news for both countries, since their economies are so intertwined. 

"Can we expect more retaliatory measures from the U.S. now that we've done this? We probably can." 

The trading relationship matters to Manitoba. The province exported nearly $9 billion worth of U.S. goods in 2017, while importing $16.6 billion, according to provincial statistics. 

Davidson thinks the counter-measures were a necessary response, but he hopes a deal is reached shortly.

Until then, he said the trade tiff will only erode consumer confidence.

"It does create a continued level of uncertainty in terms of what that relationship with the U.S. is, and [with them] being our biggest trading partner that's not a road we really want to go down."

At Cocoabeans, Hiebert made an "emergency order" last week to restock her shelves before the new tariffs were imposed. She hopes the additional stock will last her all summer.

After that, she intends to absorb the additional costs if the measures remain in place, but she'll have to watch her costs like never before.

"We'll have to sort of wait and see how this tariff war pans out."