Good morning. The strict taxes imposed by the United States on imports of Canadian metals are about to create sticker shock among U.S. consumers in search of a car. That’s in focus today – along with a look at why new homebuyers are getting a bit older.
 
 
 
 
 
 

Retail: Couche-Tard announced last night it is abandoning its US$46-billion effort to take over 7-Eleven parent Seven & i Holdings Co., accusing its Japanese rival of a “calculated campaign of obfuscation and delay. " Seven & i shares closed down 9 per cent, 23 per cent below the offer price.
 
 

Telecom: Telus Corp. is negotiating the sale of a minority interest in its cellphone tower network to one of three large domestic asset managers, a potential $1.2-billion-plus transaction that shows domestic telecom companies are following global peers by selling their infrastructure.
 
 

Tariffs: Prime Minister Mark Carney says securing a truce in the long-running soft-wood lumber dispute with the U.S. is a top priority. Earlier yesterday, he announced strict new limits on imports of foreign steel into Canada.
 
 

Taxes: The union representing Canada Revenue Agency employees is warning that Ottawa’s push for cost savings will disproportionately affect the employment of call centre workers, resulting in poorer service for Canadian taxpayers.
 
 
 

On our radar:
 
 
 
 

 
 
 
A dealership in Irvine, California. Mike Blake/Reuters
 
 
 
 
 
 

Americans can be forgiven for losing track of President Donald Trump’s flurry of tariffs. This includes his most recent 50-per-cent tax on imported steel and aluminum.
 
 

But U.S. consumers who visit a car lot are set to get a reminder of how much the tariff on metals will affect the purchase of their next new vehicle. The same goes for Canadians, says Eric Atkins, The Globe’s transportation reporter.
 
 

 
 
 
Two days after the U.S. reported a monthly rise in consumer prices, Eric gives us a breakdown on how Trump’s tariffs are about to become even more visible to Americans:
 
Patrick Anderson, principal of Michigan-based Anderson Economic Group, says U.S. auto parts makers that use steel and aluminum from Canada will pass along the higher costs of the raw material. And Canada-based car makers that import these same parts will also feel the pinch.

“One thing that’s important to know about steel and aluminum is it’s pervasive throughout the auto industry and throughout other manufacturing industries,” Anderson told me in an interview. “You’ve got steel that goes into screws and wires and brackets and then they go into the motors that go onto the brackets and that are attached by wires.

“This is creeping up through the supply chain into the cost of the parts and cost of the assemblies and we anticipate in the second half of this year, it’s going to start showing up in the cost when it rolls off the factory floor.”

This is on top of the inflationary effect of Trump’s 25-per-cent tariff on imported cars, and the 10-per-cent rise in prices for some metal parts, from a year ago.

“Neither Canada nor the U.S. consumer can completely avoid the cost impact of this tariff battle,” Anderson said. “Canada cannot insulate itself, even if it wants to because it’s so integrated with the United States.”

The rise in car prices has been muted so far, as raw materials work their way through the manufacturing process, to become finished parts and then an assembled car. Some car makers, including Toyota, are eating much of the tariffs. But that won’t last.

 
The new cost for U.S. consumers
 
Anderson published a new report yesterday showing expected price increases at U.S. car dealers. Costs per vehicle due to steel and aluminum tariffs vary widely, and can be tough to separate from other tariff costs. But here are the expected price increases in the U.S., according to Anderson:

  • US$200 to US$800 on U.S.-assembled cars that use “substantial” parts from Canada and Mexico.
  • US$500 to US$1,500 on EV sedans, small SUVs and trucks.
  • US$1,500 to US$2,200 on EVs made in the U.S. and Mexico.

The increases exclude higher costs for Chinese-produced battery components and tariffs on copper.

“Automakers and suppliers have been aggressively seeking ways to reduce the tariff impacts on their costs but cannot avoid simultaneously both the auto tariffs and the commodity tariffs,” the report says.

 
Adding up
 
Although the numbers might seem fairly minor, remember they come on top of tariff-related increases of US$2,000 to US$8,000, and more for luxury imports.

Carmakers will likely do everything they can to avoid jacking up prices, including skimping on trim levels, cutting incentive programs and, in the case of European imports, delaying deliveries, Anderson says. For Canada, some manufacturers – Mazda and Nissan – have simply stopped shipping some models here to avoid Canadian counter-tariffs.

– EA
 
 

 
 
 
 

The rising age of new home buyers
 
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Between 2018 and 2021, the number of first-time homebuyers aged 35 and over grew at a much faster rate than those under 35 in British Columbia, Manitoba, Nova Scotia and New Brunswick. While younger buyers still make up the majority, the rising rate of older first-timers signals a shift in when Canadians are entering the housing market.