Apple’s release of new iPhones this week confronted Canadians with a long familiar problem: sky-high prices.
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release → confront → problem
The top-end version of the new iPhone Duo will cost over $350 more in Canada than in the U.S.
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version → cost → U.S.
Such disparities have often turned Canadians into ambitious cross-border shoppers.
But, at this moment, the iPhone pricing is an anomaly.
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pricing → turn → moment
After years of inflation, months of rising tariffs in the U.S. and a weak loonie, it is Canada that is now the haven for cheap buys.
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that → rise → buys
The Globe and Mail compared pretax prices this week for more than 40 goods using the websites of more than a dozen retailers that operate on both sides of the border.
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that → compare → border
In some cases, such as the Storkcraft Beckett convertible crib in natural wood carried by Walmart, the same product is for sale in the U.S. for a higher sticker price than in Canada.
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product → carry → Canada
Factor currency conversion, and Canadians can purchase that crib for nearly 40 per cent less.
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Canadians → factor → less
Microsoft has priced the base model Xbox Series X nearly 10 per cent cheaper.
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Microsoft → price → model
A base-model Ford F-150 pickup sells in Vancouver, B.C., for $4,200 below the price in Vancouver, Wash., a difference of 8.5 per cent.
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pickup → sell → cent
Meanwhile in the U.S., Home Depot lists a KitchenAid over-the-range microwave for US$1 more – making it 38 per cent pricier with the currency conversion.
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it → list → conversion
An LG French door fridge costs an additional 15 per cent.
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fridge → cost → cent
Banana Republic sells its featherweight cashmere Henley, a women’s fitted top, for 10 per cent more and a pair of Nike Air Max 270 is 22 per cent costlier.
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pair → sell → Max
What’s true for bigger items is true for smaller items as well.
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’s → ’ → items
And a Swiffer WetJet mop at Walmart sells for 20 per cent more in the U.S., a 500-caplet bottle of Tylenol extra strength gets a premium of 27 per cent.
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bottle → sell → cent
Even a 12-pack of Coca-Cola cans at Walmart costs nearly 30 per cent more south of the border.
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pack → cost → border
Sticker tags reflect wholesale costs, logistics expenses and market conditions.
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tags → reflect → costs
For many years, those worked against Canada.
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those → work → Canada
Retail consultant Clay Parnell recalled working with shoe retailer Aldo in the late 2010s.
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Parnell → recall → 2010s
At the time, Canada’s immense geography and smaller market worked against it.
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geography → work → it
“Historically, Canadian prices have been higher,” said Mr. Parnell, who is chief executive of The Parker Avery Group.
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who → say → Group
Retailers in the U.S. have contended with higher rates of inflation and a blanket of tariffs, which have both raised import costs and offered cover for price hikes.
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which → contend → hikes
“On the tariff side, most of it generally is being passed through,” Mr. Parnell said.
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Parnell → pass → it
Some retailers, too, are raising prices even outside of tariff increases, padding profit margins.
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retailers → raise → margins
In Canada, meanwhile, the economy has tended to be more sluggish than the U.S. in recent years, while Americans on average enjoy a higher disposable income.
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Americans → tend → income
Companies that sell across borders tend to price for local markets, “setting prices based on local consumer demand and purchasing power rather than strictly converting currency,” said Hakan Yilmazkuday, a professor of economics at Florida International University.
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Yilmazkuday → sell → University
He sees lower Canadian prices as a reflection of more straitened northern circumstances.
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He → see → circumstances
“If companies fully applied the exchange rate difference, Canadian sales volumes would collapse.
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volumes → apply → difference
To maintain their market share, these retailers potentially absorb some of the currency penalty by accepting lower profit margins in Canada,” he said.
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he → maintain → Canada
Currency matters, too, of course.
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Currency → matter → course
When major retailers set prices for a given country, “they do not change them very frequently,” said Jeffrey Campbell, an economist at the University of Notre Dame.
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Campbell → set → Dame
When the loonie drops, U.S. prices tend to grow more expensive by comparison.
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prices → drop → comparison
“It is tempting to look at Canadian domestic developments as a source of loonie weakness, but in this case the fault is really in the stars rather than with ourselves,” he said.
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he → look → ourselves
The U.S. dollar remains a haven in times of risk, “so while the Iran war has been good for the price of oil, it has also been good for the greenback.”
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it → remain → greenback
Price disparities between the U.S. and Canada have cycled as circumstances change – and today’s price gaps will almost certainly be reshaped by shifting policies and economic performance on both sides of the border.
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gaps → cycle → border
This isn’t the first time, either, that Canadians have found themselves with a price advantage.
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Canadians → find → advantage
In the early 1980s, around the time of price controls imposed under the National Energy Program, gas was considerably cheaper in Canada.
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gas → impose → Canada
And Americans flocked north.
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Americans → flock → ?
“I remember my Dad taking us from Detroit to buy gas in Windsor during that time,” Prof. Campbell said.
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Campbell → remember → time
Nearly a half-century later, a raft of different circumstances has again tilted the pricing landscape in favour of Canada – at least, outside of the fuel pump and the Apple store.
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raft → tilt → pump
Add up the strong U.S. dollar, tariffs and less favourable economic circumstances in Canada, and the U.S. is now “the more expensive retail environment for many items,” Prof. Yilmazkuday said.
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Yilmazkuday → add → items
