Why are Canadian prices higher with U.S. dollar parity?

October 24 2007 by Ellen Roseman

The big price gaps between identical Canadian and U.S. products are making people irate. That was the topic of my column today, which got many comments.

Canadians realize that prices take awhile to adjust along the supply chain, but wonder why the adjustments are taking so long. And why do some products still sell for as much as 30 per cent to 40 per cent higher in Canada? That’s unfair.

Cars are a topic of great concern, because the savings could be so impressive if shared with customers. Henry Juroviesky, the lawyer behind the car conspiracy lawsuit, says he’s received more than 1,000 emails and calls from people who’d like to join the class action or share their frustration at the roadblocks to buying vehicles in the United States. The biggest obstacle is being told you won’t get warranty coverage in Canada dealers if you buy from a U.S. dealer and bring your car across the border.

47 comments

  1. Bylo

    Oct 24 2007

    In your column today

    Sabharwal called a Toyota dealer in Buffalo, N.Y., to ask about buying the car, but was rebuffed. “As soon as I identified myself as calling from Toronto, the manager said there is a treaty between Toyota Canada and Toyota U.S.A. that they cannot sell new vehicles to Canadians for personal export use.”

    Melanie Testani, a spokesperson for Toyota Canada, couldn’t comment yesterday on his complaint. She hoped to get answers shortly.

    So did you hear from Melanie? In any case, Toyota Canada at least contemplates the possibility that Canadians might buy their next Toyota in the US. Otherwise why would they go to the trouble of producing this FUD? According to Toyota Canada they’ll honour the warranty on cars sold in the US even though they might drag their heels doing it.

  2. Jamie

    Oct 30 2007

    Just made a purchase from Barnesandnoble.com, for about 1/3 the price of the item in Canada. The shipping charge of $6.50 (I couldn’t mail something to my neighbour with Canada Post’s insane rates for that!) was waived when they took one extra day to ship the item. Barnes and Noble is one of the few USA sites that collect the tax, so there will be no brokerage fee.

    Compare that with a recent order from Dell.ca, which has finally shipped after a month, despite being advertised as ships next day, and an order from Bestbuy.ca for in-store pickup that was confirmed ready…only to find out they didn’t have the product when I got there.

    I won’t shed a tear for Canadian-based retailers as I continue to shop whenever possible in the USA for better prices and consistently much better service.

  3. Jim

    Oct 31 2007

    I’m getting very serious about finding retailers who will sell products at prices that reflect our strong Canadian dollar and what I found out might be a tactic you will want to pass on to your readers.

    My local Sams Club was selling a FoodSaver Vacuum Packaging System (Model V2440) for $169.99 Canadian. The manufacturer’s American website quoted a price of $139.99 U.S. I called the manager of my local Sams Club and he told me they couldn’t match the manufacturer’s price, but if the product was sold at an American Sams location and the price was lower he would match that price.

    He checked out the American store price and offered to sell me the same unit for $134, a very big saving for very little work on my part. I got the impression his staff had been told to offer this price cut if a customer asked for a Canada/U.S. price comparison. I hope the shelf prices will change to eliminate the need for customers to ask for a discount.

    I went to Sams again this morning and purchased a small kitchen appliance that was store-priced at $399.99 plus tax. I got it for the American price of $259.99 plus tax.

    My local Wal-Mart refuses to price match. Head office told me it was up to each store manager whether or not they would sell at the U.S. price, but the managers told me it wasn’t allowed by head office.

  4. norm

    Oct 31 2007

    Thank you for this, Ellen. As a voracious reader, my main focus has been on the book and magazine industry.The industry seems more intent on riding the two-price system and continuing to gouge than on treating us fairly.

    Book stores maintain they need time to react to our strong dollar – but they have had more than three years.

    There is something the industry isn’t telling us. These prices are set at an American publishing house and I suspect with Canadian input. I suspect more than a little cultural protectionism.

    Keep up the good work.

  5. AA

    Nov 3 2007

    Thought it was interesting to note that while Wal-Mart Canada has lowered prices on Greeting Cards, Books and Magazines to reflect the U.S. list price, it has resulted in an increase in price on some books.

    Wal-Mart has always had an everyday 10% discount on the Canadian cover price of Magazines and a 25% discount off the Canadian cover price on bestseller books. That discount no longer applies as they have moved to the U.S list price.

    On most hardcover books, this is a price increase. For example: a hardcover book with a $44.95 Can./$34.95 U.S. list price used to sell for $44.95 – 25% = $33.71……but it now sells for $34.95 with no further discount.

    With Greeting cards and Magazines, this does result in a slightly lower price, usually around a 50-cent savings.

    Sounds like a smoke and mirrors press release to me.

  6. Twotone

    Nov 6 2007

    Good for all of you who are buying stuff in the US. We need to continue this pressure not only on the retailers and wholesalers, BUT also on the damn government which continues to put the boots to us with extremely high tariff duties and which allows restrictive trade practices to continue.

    We need to move to North American consumer standards, thus allowing for the free movement goods across the border at all currency levels.

  7. Honda US Protecting Canadian Dealers

    Nov 6 2007

    Honda US told me that the Honda bought at a US dealership by a Canadian will not have a valid warranty, unless the Canadian has a valid US driver’s licence.

    I was investigating the Honda CR V, which is built in the US, so there are no duties on the vehicle due to the free trade act. But I guess there is always a way to artificially inflate prices.

    Just a note to the Toyota dealer: Don’t the US dealers pay the same fees as Canadian dealers? Well, they must really be hurting but their prices are still lower.

  8. TZK

    Nov 9 2007

    Did a price comparison for the Toyota Highlander Hybrid Limited Edition. Depending on how you look at things, the price difference is anywhere between $10k – $17k.

    I will simply NOT buy any Toyota product unless this changes soon. They will lose 3 families’ worth of loyal customers from our extended family. That is a lot of cars for all the kids in the future.

  9. Jamie

    Nov 9 2007

    If Ellen covers the issue again, maybe she can get a quote from Dell at the outrageous difference in prices between their .com and .ca sites.

    One example of many: Canada A570 digital camera (Canon honors warranty in Canada for US purchases, though Dell won’t ship here from .com)

    Dell.ca: CDN$259.99 (US$275)

    Dell.com: US$170

    Surely their “business costs” in Canada, especially for a place with no retail stores, can’t possibly justify a 62% premium. Many other products are similar.

    I can probably find the same thing from an American dealer on eBay for similar to their USA price, who may lower the customs declaration or luck into it not being assessed tax anyway (or frequently waved through for those making the shopping day trips). It’s impossible to support Canadian shopping with differences like that.

  10. norm

    Nov 9 2007

    The car situation is worse than previously detailed: It appears Transport Canada is in bed with Toyota and Honda.

    According to a Canwest article, many Canadians who have already purchased vehicles in the US are being denied the ability to license and drive their vehicles. Vehicles are being declared inadmissible by the car companies and Transport Canada is letting them write the rules. Boycott time.

  11. George

    Nov 10 2007

    Toyota dealer, I have no sympathy for you. As far as I’m concerned, you should be ashamed to be selling to be charging Canadians a 50% premium compared to prices in the US. If you can’t provide your customers with the product they want at a reasonable price, maybe you should be in a different business.

  12. Scott

    Nov 16 2007

    Honda Acura should be ashamed of themselves. Over the last 10 years, I have bought 8 new Hondas. All I feel now is disgust.
    They are saying that ’08 vehicles do not meet Canada’s new immobilizer law. But if you are an American moving to Canada, they will gladly provide you with a letter that says the ’08 model does meet the immobilizer restriction.

    I am glad Honda is part of a class action lawsuit on restricting Canadians’ purchases in the United States. We have to stand up as all Canadians and demand everything here at US par dollar rates. Stop gouging us!!!!!!!!!!!!!!!!!!!!!!!!

  13. Sanj

    Nov 21 2007

    “God Bless America” for the lowest prices we enjoy. I have done a thorough research on Canadian and US pricing and have decided to purchase every thing from US including my groceries. I want the retailers to realize that Canadians are not fools to pay higher prices for the identical stuff sold across the border. I save on taxes as I have to pay them on a lower price when I bring my goods into Canada.

    We the shoppers should stop purchasing goods in Canada which are sold for exorbitantly higher prices. All retailers are doing now is coming up with stupid excuses for grabbing more money from innocent customers. Wise ones do their research and shop where the prices are lower and qualities are better.

  14. Miguel

    Dec 3 2007

    I just wanted to share this bit of information with you regarding the price differences between Canada and the US.

    I cannot believe how a large firm like IKEA can get away with the current price differences between the products sold in Canada and the US. For instance take a look at this example:

    Canada $299 http://www.ikea.com/ca/en/catalog/products/90096456
    US $169 http://www.ikea.com/us/en/catalog/products/90096456

    This is around an 80% price difference, and people just complain because the cars are 20-40% more expensive in Canada… 😉

    So I sent an email to IKEA asking for a explanation and this was their reply:

    ======================================================
    Hello Mr Miguel,

    Thank you for your email. On behalf of IKEA, we appreciate the time
    you took to share with us your thoughts about our prices.

    IKEA Canada prides itself on providing the lowest prices possible to
    its customers and we guarantee our prices in our catalogue for one
    full year, regardless of the strengthening or weakening of the
    Canadian dollar. Our
    prices with our global suppliers are committed to anywhere from 12 to
    18 months ahead of time at a fixed exchange rate that IKEA has locked
    into for one full year. As a result, IKEA Canada does not benefit in
    any way from
    the advantages of a strong Canadian dollar.

    U.S. and Canadian IKEA units also operate completely independently of
    one another. Each country determines its own prices based on factors
    such as the cost of goods, labour costs, foreign exchange,
    transportation costs as
    well as the supply and demand factor. Canada has 1/10th the population
    of the United States and therefore does not have the same buying power
    as the U.S.

    We truly value your opinion, as well as the opinion of all our customers.

    Sincerely,
    IKEA Website Customer Service
    ======================================================

    Unfortunately this email did not explain the price difference to me, so I sent them another email (see below) to which I never got a
    response.

    ======================================================
    Dear Sir/Madam,

    Thank you very much for your prompt reply.

    I totally understand that a big company like IKEA locks their prices with their global suppliers for a certain period of time, however the Canadian dollar has been above 80 cents for at least the last three years. So this does not seem to explain the different prices.

    How independently do the US and Canadian IKEA operate considering that for the most part they all share the same global suppliers as you
    mentioned in your own email? I assume you meant that they have to cover their own labour costs, utility costs, transportation costs…
    Unfortunately this does not explain it either, considering that most of these costs have been historically lower in Canada than in the US.

    “Canada has 1/10th the population of the United States”. So, if prices in Canada are almost double because we have a 10% of the US
    population, I wonder how prices will be in Luxembourg since they are only a 0.16% of the US population. I guess this obscure logic does not
    explain the difference either.

    Obviously nobody at IKEA thought through their reply to my message before it was sent out. And even worse, my question was never answered: Is IKEA planning to adjust their prices any time soon?

    Thanks again for your help.

    Sincerely,
    Miguel

  15. Christelle

    Dec 11 2007

    A few weeks ago, I decided not to buy an item from Ikea because of the 60% or so markup on the item compared to the US website. I believe that today I found an even worse offender, with a price markup of 200% (at least I think if an item sells for 3 times the price here, then it’s 200% MORE than in the US, so I’m pretty sure my numbers add up!).

    The culprit is Payless Shoe Source – with a pair of boots that currently retails for $22.99 on the US website (conveniently they don’t ship to Canada, much like Ikea and Pottery Barn) and the sticker in Canadian retail stores is… drumroll… $69.99!! Forget the books, greeting cards and such that are marked up at about 20% (which did at some point reflect the exchange rate). How does one explain selling the same item for 3 times the price in today’s free market?

    There should be a law against retailers taking advantage of their captive audience. To some extent, online shopping has increased competition and given consumers better choices. But conveniently, most US companies with Canadian retail operations will not ship to us here in order to protect their obscene margins in Canada. Companies like that should be exposed and be driven to bankruptcy by Canadian consumers!

  16. Doug Rouse

    Dec 14 2007

    Finally, Canadians are finding out that they have been gouged by retailers. Prices in the USA have been 25% to 100% lower, even when our dollar was at 80 cents.

    I have shopped in the USA for the last 5 years and continue to do so.

  17. Outsider

    Dec 21 2007

    RIV is not a division of Transport Canada. It is a private company. This phrase is directly copied from their website:

    The Registrar of Imported Vehicles (RIV), operated by
    Livingston International on behalf of Transport Canada

    Livingston International seems to make policy to suit their own interests, much as if they were the government, so the error is understandable. Such as using Canadian Tire for vehicle inspections for importation. Canadian Tire is another client of theirs:

    http://www.adminserv.ca/document_library/adm_data_mgt_collections_cdt_tire_pr_rel_apr1_2003.pdf

    RIV/Livingston International has made an arrangement with BMW to the effect that an importer must get a “Recall Clearance Letter” from a Canadian BMW dealer. The Candian dealer will charge $500 CDN for that piece of paper.

    I believe that Livingston got the contract under the now ousted Liberals.

    I’ve also found something about a donation of a car and a motorcycle to a golf club in Ontario of which at least one officer of Livingston International is a member.

    How very Canadian.

  18. Nick

    Jan 7 2008

    I just don’t understand why companies are still charging a lot more for the same product. Here’s an example:

    Bose speakers, CAD $549 vs. USD $399

    Canadian:
    http://www.bose.ca/controller?event=VIEW_PRODUCT_PAGE_EVENT&product=am5_virtuallyinvisible_index

    US:
    http://www.bose.com/controller?event=VIEW_PRODUCT_PAGE_EVENT&product=am5_virtuallyinvisible_index

    Same product, but significantly higher prices. Is there a way we can ask the government about these sort of things?

  19. Alan F. Lucas

    Mar 1 2008

    As a small business owner for 20+ years now, I’ve been importing from all over the globe. In other countries there are standing agreements which force a buyer to deal with the “Canadian Distribution Channel” which in most cases are held by one company for a whole range of competing products. They sell the product for whatever can be “gotten away with” and never for a penny less. That the government protects these corporate interests should be expected. While you may vote for an elected official, the money for his election drive is paid for by these same companies. Until that changes, expect no other changes in anything adversely effecting the corporate bottom line.

    With all the goods I’ve seen listed the worst offender has been missed. Nothing is so controlled in Canada as the pharma industry. If they cure cancer tomorrow, don’t even look for it until the “Canadian Distribution Channel” has been settled and without a doubt it’ll cost us 40% more than south of the border.

  20. john grant

    Apr 4 2008

    I phoned Toyota Canada today to get their side of the story on the enormous discrepancy between the Canadian and US pricing of the Toyota Camry Hybrid.

    Initially, I was given the stock argument of economies of scale: US = bigger market, therefore cheaper prices. But when push came to shove, the guy on the other end of the line simply said they charge what the market will bear.

    As long as we’re willing to pay, they’re only too willing to charge!

  21. tim dunn

    May 6 2008

    Reply from LACOSTE Re: Why a blazer costs $425 in USA vs. $595 at Yorkdale in Canada.
    YIKES, WE CANNOT STAND FOR THIS KIND OF TREATMENT ANY MORE….

    Dear Mister DUNN,

    We thank you for your message and your interest in our brand.

    The organization of our distribution gives each distributor of the LACOSTE brand autonomy in its price policy.

    Selling price fluctuations from one country to another are closely linked to currency fluctuations.

    The countries that are selling the brand under license within a determined territory can charge a substantially different price than other countries, due to a local economical effect.

    We remain at your disposal if you need any further information.

    Best regards,

    Aurélie Piperaud
    Lacoste Customer Service.

  22. Stock market news

    Sep 9 2010

    The continuing strength of the CDN dollar could be telling us that the rise US dollar will not be sustained over the longer term. The equity markets also seem to be indicating the same thing as they too have resisted the US dollar’s advance. Regardless, I still think the US dollar will continue to rise over the short term.

  23. Hampford Ross

    Oct 20 2010

    The best way to beat them is to open a ups poste office box in Buffalo. Order online and have iy shipped there they will call you when it comes in so you can pick it up no duty fees are charged at the border only tas 13 %

  24. Ruth

    Dec 8 2010

    I think one of the worst culprits of mark ups in Canada is POTTERY BARN! Many of their items here are double the prices in the U.S.

    Often, I will purchase through eBay if I can get the seller to ship standard and put the actual price I paid on eBay on the package. Customs really dings you these days, though, for eBay purchases and I’m not sure how they are figuring a five dollar item warrents forty dollars in duties at the door AFTER I have already paid shipping. But I digress.

    Pottery Barn offers items that I want and their prices in the U.S. are already considered high, but in Canada they are utterly ridiculous in relation to our dollar. There is actually no justification at all for this.

    I’m also not pleased with them opening four stores ONLY in Toronto and Vancouver, while in the U.S. they are in tons of smaller cities. No outlet, double the prices, stores glut the market in the only two cities that company probably knows anything about in this country.

    I’m done with them and will buy indirectly. Clearly, they do not care about the Canadian consumer’s needs. And by Canadian, I don’t just mean Toronto and Vancouver!

    I asked why the prices were double here and the clerk just agreed with me that they were too high here. Unacceptable.

    I have the design plans for some of their furniture as well and I’ll just get it made myself rather than buy from them in the future.

  25. wayne

    Nov 28 2011

    After speaking with a HomeDepot customer service representative Nov.28th/2011, I was informed that HD Canada and HD USA are two totally different corporations?????

    I had called to inquire about a LG washer/dryer set on sale LG WM3360HVCA washer Internet # 202518450 Store SO SKU # 293167

    LG DLEX3360V dryer Internet # 202518456 Store SO SKU # 113769

    Which I saw online Nov. 27 and 28th 2011 for $699.00 each, thats $1398.00 for both the washer and dryer.

    Sad part is that HomeDepot.com is apparently a different company than HomeDepot. ca and so is the price!!!!

    The IDENTICAL washer at Home depot Canada is $1498.00 Dryer also $1498.00. A total DIFFERENCE of $1698.00. Different company different prices is what I was told. I think the. ca stands for Canadian Advantage as in “taking”

  26. Mike

    Dec 13 2011

    Funny, it’s years since this article came out and the prices are still unfair.

    A Ford Edge that is actually made in Canada is thousands more than if purchased in the USA (I’m talking without freight or taxes – just the base price). How can that be?

    I was just looking at a Dyson vacuum. Very expensive. I was going to buy one, but I accidentally went to the US site. NO WAY now. I’ll use my old vacuum until they do the right thing.

    Dyson actually told me that the price of the currency doesn’t matter. Really? They’re made in Malaysia, so I think it does matter.

    I’ll complain where I can and forget buying any luxury items until Canadian companies stand up for their rights.

  27. Mike

    Dec 13 2011

    I forgot to mention that I found an article for Porsche (at least I think it was them). I could never afford one, but they announced fairer pricing for Canadians a while ago. Way to go, Porsche.

    I complained once to Skil about their saws being overpriced in Canada. Now I see the price at one store is only $20 more than the USA.

    Still not great, and most other tool stores are still way above these prices, but it shows that Canadian Tire is at least a bit fairer – if only on one Skil product.

  28. Adam Thomas

    Dec 15 2011

    Canada has a lousy distribution system combined with hig taxes and a greedy entrepreneur class.This explains why the same product from China costs more here than in the US – even accounting for economies of scale.

  29. Hi

    Apr 28 2013

    Personally, as a general rule, I absolutely refuse to buy any consumer item in Canada unless it is an emergency.

    I just buy the same, identical items when I am overseas for travel, and typically, I can get them at prices that are 20%-50% lower than that in Canada, even before taxes. When you factor in the higher Canadian tax, I would say I save about 30%-60% generally on each identical item.

    The only things I buy in Canada are food, since I have no choice.

    And I typically stay off from price-gouging Canadian retailers such as Sobeys and Longos.

    I think Canadians are slowly waking up to realize that they are being price-gouged. But I don’t think Canadians are fully aware of the extent and the degree of price-gouging in Canada yet.

    It is just shocking, to say the least.