Why Do Canadians Pay So Much More Than Americans?
Recently, the discrepancy between the price tags on automobiles in Canada versus those in the United States has made headlines. Most shocking is the fact that Canadians pay more for cars that are manufactured here at home! And don’t blame shipping for higher price tags because Americans in Hawaii still pay less than Canadians. When probed, the Canadian automobile industry suggested that part of the reason for higher prices in Canada was the cost of translation. This is a serious insult to Canadian intelligence, given that this is a one-time cost that may equate to a few hundreds of dollars, not thousands per vehicle. The fact that the larger automobile makers have forbidden their American dealers from selling to Canadians who cross-border shop proves that they are exploiting the Canadian market.
The truth is that Canadians pay more than Americans on almost all consumer goods: groceries, beer, gas and books, to name a few, despite being just across the border – geographically much closer, may I add, than those living in Hawaii. Why is that?
In some cases, it has to do with the different tax structures, but otherwise much of the price-differential is based on an outdated value of our dollar. But after years of comparable exchange rates, why are we still being gouged?
Many of my friends have invested in a chest freezer and have integrated regular cross-border shopping trips to the US into their routine. They habitually stock up on chicken, milk, beer, and some have even registered for a membership to Sam’s Club (comparable to Costco) in order to save. Despite accounting for the cost of gas and the use of their precious time, the overall savings are still worth the regular shopping trip. Plus, the number of Canadians who now use a post-box in the States so that they can save the cost of shipping on their online purchases is staggering. The unfortunate part is that, on a macro-level, this type of shopping habit will wreak havoc on the economy of bordering Canadian cities.
Why has it come to this and what can we do?
It is true that part of the explanation relates to taxes, demand, or distance to be shipped, but the rest comes down to what the Canadian market will bear. We pay, therefore nothing changes. How can you influence the market? Lobby federal and private consumer agencies, such as the Consumers’ Association of Canada, and demand change. These agencies are in place to champion consumers’ interests with government and industry, and help solve marketplace challenges.
How does this relate to personal finance?
Speaking out against the price disparity of consumer goods in Canada versus the US will create more pressure at a federal level and will eventually become a government priority and a platform issue. It is important that we each play our part so that we can enjoy the same prices as our friends south of the border.
Less money spent on consumer goods translates to more money in your pocket.