Buying Canadian: How to do it right – and why there will be drawbacks

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The trade war is instilling a newfound sense of patriotism in Canada’s consumers, with a number of social media threads calling on users to support domestic products and industries, and avoid anything made in the U.S.

But in today’s globalized economy, buying Canadian is often a tricky proposition, experts warn.

Supply chains often resemble “spiderwebs, where there are all these interconnected lines,” said Laurie Tannous, special adviser at the Cross-Border Institute at the University of Windsor.

So what’s the right way to show your patriotism at the check-out counter?

How to buy Canadian: Cars

When it comes to cars and trucks, buying Canadian is “very very difficult,” Tannous said.

A carmaker’s nationality has generally little to do with where a certain car model is manufactured. Most Canadians know that the big Detroit three – Ford, General Motors and Fiat-Chrysler – have manufacturing plants on both sides of the border. But so do Japanese giants like Toyota and Honda or South Korea’s Hyundai.

In North America, for example, the Toyota RAV4, for example, is made in Woodstock, Ont. The Toyota Highlander comes out of a facility in Princeton, Indiana.

But that’s just the assembly, which doesn’t usually account for a lot of the vehicle’s final value. The American University, which produces the Made in America Auto Index, estimates that only about six per cent of the vehicle’s value comes from its labour content.Then there’s everything that goes into a car or truck.

“The parts can come from just about anywhere in the world,” Tannous said. “You’re not going to have one vehicle that’s made with one country’s parts.”

On the other hand, while auto supply chains stretch across the globe, if a car is assembled in Canada, “chances are, it will also draw on Canadian parts,” said Marc Wulfraat, president and founder of logistics and supply-chain consulting firm MWPVL International Inc.

Automakers rely on the so-called just-in-time manufacturing process, which cuts down inventories by requesting parts only when they are needed in the production process. This leaves very little margin for error, meaning that assembly plants often come to rely on nearby factories for certain components, Wulfraat said.

And opting to buy a car that’s put together in Canada also helps support assembly-line workers.

“It’s going to help keep those jobs here,” Tannous said.

Bottom line: If you’re hoping to use your dollars to support the Canadian auto industry in the face of President Trump’s threat of tariffs, choose models made here in Canada.

How to buy Canadian: Food

Buying Canadian is a little easier when you’re in the grocery aisle, Tannous said.

If you’re buying tomatoes and the label says they come from Ontario, you’ve done your research.

But things tend to get more complicated for processed foods.

“If you’re buying cereal, for example, the wheat might come from Canada but the sugar from the U.S.,” she said.

And unless a company has a marketing strategy of highlighting that its products are, say, “100 per cent Canadian,” you won’t be able to tell where every ingredient came from.

WATCH: Trump says he likes ‘O Canada’

Unintended consequences

In a spiderweb, it’s hard to tell exactly who might be affected if you start pulling the strings.

The caveat with buying Canadian is that, while it might help some domestic workers, it might hurt others, too.

Take ketchup, for example, which is on the list of products targeted by Canada’s tariff countermeasures in response to U.S. duties on steel and aluminium.

For example, let’s say you start buying President’s Choice Tomato Ketchup, which claims to use only Canadian tomatoes. You’ll be wielding the power of your wallet against not only Heinz but also French’s, which is also American but has a plant in Ontario and also says it uses Canadian ingredients.

Similarly, if you start boycotting American cars, you might be unwittingly hitting Canadian auto parts suppliers and Canadian dealerships, Wulfraat said.

“In a trade war, nobody is going to win,” Tannous said.

Will it work?

The other gnawing question facing consumers who start buying Canadian in response to Trump’s trade policy is whether their efforts will be all for naught.

Ideally, Canada, which accounts for 18 per cent of U.S. exports, would start boycotting U.S. products en masse for a sustained period of time and deliver a hit to America’s corporate bottom line, one the White House will hear about.

In practice, that’s a tall order. When it comes to boycotts against a specific company, consumers are often “easily distracted,” Daniel Diermeier, now provost of the University of Chicago, wrote in a 2012 article for the Harvard Business Review.

For a company boycott to have a good chance of success, he wrote, customers must “care passionately,” be able to easily understand the issue, hear about it from the media and be able to implement the boycott without too much trouble (i.e. there are plenty of alternative products to choose from).

Arguably, it’s a bit easier to get the public on board when it’s a matter of national pride. For example, the 2003 U.S. boycott of French wines over Paris’ opposition to the Iraq war, led to a 26 per cent drop in sales.

It did not, however, change French policy in Iraq.

Besides, it would be much harder for Canadians to stick to a boycott of U.S. products than it was for Americans to choose, say, Californian wines over champagne or a glass of Bordeaux.

Still, Wulfraat believes Canadians should still try to send Washington a message.

“That’s really what’s needed: A strong, almost nationalistic pride, that says, ‘Hey, we’re not going to get pushed around. We’re going to do something here to help our country,’” he said.

“And I really hope that it happens.”

source:-globalnews