Prices too high in Canada compared to US?

Question

Why are Canadian paying about 40% higher prices then americans for the same goods. I've heard Canadian retailers whine about import duties and how the dollar, at the time of purchase was a bit weaker then it is now. So assuming this logic is true are we here in Canada going to see prices come in line with the US next year, as currency is now much stronger? If retail was as low margin as the retailers claim they wouldn't be doing it. A $35 dollar jacket bought from China might after it's all said and done cost the retailer $100, he then turns around and sells it to you for $250. Explain this please. And also try and defen why all Canadians shouldn't jump in the car and drive to the nearest border town to throw our money at the US? Why buy a TV in Canada when you can buy the same TV, plus a new home theater surround system, plus 10 DVDs for the same price in the US?

To respondent "Cheap Advice" - I totally agree with you that as a Global economy we should be allowed to make our own purchasing decisions. BUT - the Canadian government at the moment fines you with tariffs and taxes quite heavily for any imports higher then $20. Is that fair? I've even heard that if a Canadian buys a new car (to save a few Gs) from the US the warranty is void if brought back to Canada! Manufacturers won't recognize it.

To respondent KevinStud99 - I read in the paper today that Wal Mart, Canadian Tire and other large retailers will be on par with US prices. In fact, a Canadian TIre in Sarnia has already changed and is now on par with US in response to a rapid decline in sales. While it may sound fine in a lecture how the cogs of economy work, people must always be allowed choice. And to your point about labour - hardly anything is made in Canada, certainly nothing at Wal Mart.

Answer 1

What you're seeing right now is a bit of a distortion caused by a rapid change in the exchange rate between the US and CDN dollars. Exchange rates move in cycles, so this will not likely last.

But, Canadians CANNOT expect everything to suddenly become 30% cheaper just because of a currency fluctuation. That is totally unrealistic. You need to realize the vast majority of costs in the Canadian economy are based on Canadian dollars, and so have NOT gotten cheaper. That is, Canadian employees are receiving the same pay as before in Canadian dollars: Canadian labor has not gotten any cheaper, so Canadian products have not gotten cheaper.

Next, prices are set according to supply and demand, not foreign exchange rates. If Canadians are still buying things (and they are, since they are not being paid any less to compensate for the strong currency), then you shouldn't expect a Canadian merchant to just lower prices for no reason. Businesses are not charities.

Also, believe me you do not WANT prices to suddenly drop 30%. There is a word for that: Deflation. Depression. If every Canadian business saw its prices and revenues drop by 30%, they'd all have to lay people off. They'd default on loans and go out of business. The result would be the worst recession in Canadian history and massive unemployment. Another Great Depression. That would be inevitable.

For the reason above and others, the Canadian government tries to insulate the Canadian economy from the U.S. economy, through various barriers and tarriffs, etc. No it is not truly a free trade zone, despite NAFTA. That is why differences in things like prices, wages, productivity, land prices, etc. can persist.

NOTE -- Scratch, yes in reality you can find certain specific cases where prices will be lowered, where it's easy for Canadians to substitute US purchases instead. Again, that's just supply and demand, where demand can shift to the US. However, that's just a few products among millions of products and services in all of Canada. Neither Wal Mart nor anyone else will lower prices across the board. Not going to happen.

My point again about Canadian labor. Canada certainly does manufacture plenty of things (cars for example). But it still doesn't much matter if lots of manufactured products are originally manufactured elsewhere. It is still Canadian labor that imports it, distributes it, sells it, does the marketing. A company pays its Canadian lease, Canadian taxes, Canadian utilities, etc. Plus services are most of your economy, and they are 100% Canada labor.

Answer 2

Mark up is what it is called now if you wait the price will go down as soon as a new technology comes out. Always safer to buy a couple of years after the new technology comes out.

Why are we paying for gas by the litre instead of by the gallon like we used to in 1970? and might I add the price went up a litre to where we are paying over 5.00 a gallon for gas in Canada why because the government converted to a system it knew hardly anything about and who paid, who always pays the taxpayer because with increases within the government of 40% pay hikes while we are lucky to get 10 % over a period of 3 years so we get 3.33% wage increased while those in cabinet who already make over 100,00 grand a year get a 40% hike.
And as Canadians we just milk it all in, where is the 60's movement that would not have stood for this, the ones not going for parliament that is, only one NDP leader gave her raise to charities helping our youth, the upcoming society that will make the rules in just a short ten or twenty years from now.

Canadians used to have a bigger back bone for showing the government how disatisfied they are with the government, somehow we have lost it, many people refuse to vote thinking "that will show them" NO that will encourage them. We have to go back and straighten out a few agendas.

It is still the best place in the world I love my country just the people managing it don't seem to know what they are doing.

Answer 3

Fortunate for you and not so good for the US. When the US dollar was worth 60 cents Canadian, only 5 years ago, people from the US used to go to Canada for the exchange rate to buy things. So go and buy, it is supposed to be a global economy so we are told, so why should you not be able to take advantage of the US's lousy dollar; I knew it was going to go to heck when George Bush the first put his wife's picture on the dollar. (Just kidding, but the resemblance is uncanny.)
As for the retailers from China and the raise of prices, Nike has made a living having its tennis shoes made in Vietnam for pennies on the US dollar, brings them back and puts an NBA players name on it and charges $120. The charges have nothing to do with what a just price is for an object, but how much they can get out of you.
Some of the price difference between you and the US is the loss of value of US currency; the other part is pure greed like Nike and other retailers who get "bargains" from overseas and pass the savings on to themselves and not the consumer.

Answer 4

Take advantage of the stronger Canadian dollar and start buying US goods for the small stuff. Mail forwarding services are what to search on.

http://www.bongous.com is a good one.

You still have to pay the import duties and taxes, but there are still some good savings to be had.