Canada’s restaurant industry has broadly welcomed the federal government’s latest retaliatory tariff package after many food products identified as priorities by the sector were kept out of the new measures. Restaurant operators could still face higher costs for packaging, equipment and selected ingredients as the tariffs work their way through supply chains.
The federal government announced Tuesday that Canada will impose counter-tariffs of 15%, 25% and 50% on $27.6 billion worth of U.S.-origin imports beginning September 8. The measures respond to the latest round of U.S. tariffs and cover products across a wide range of sectors.
Restaurants Canada said the approach addresses some of the industry’s biggest concerns about retaliatory measures adding another layer of pressure to food costs.
“We appreciate that it has listened to the concerns raised by our industry and avoided tariffs on many of the priority food products we identified,” said Kelly Higginson, President and CEO of Restaurants Canada.
The association said avoiding many of those products should help limit additional pressure on food costs and menu prices while reducing potential disruption to Canada’s food supply chain. That relief is significant for restaurant operators, although food products have not been entirely excluded from the tariff package.
Certain U.S.-origin dairy products, including a range of cheeses, are subject to 25% tariffs, while some whey products and selected food preparations face higher rates. The tariff list nevertheless avoids broad duties across many staple restaurant ingredients that could have produced a larger and more immediate cost increase for the industry.
Packaging Emerges as a Key Concern
Restaurants Canada’s initial review identified packaging as one of the areas requiring further attention, and the federal tariff schedule includes several products commonly used across the foodservice industry.
Certain U.S.-origin polyethylene sacks and bags are subject to a 50% tariff, as are categories covering plastic tableware and kitchenware. Paper and paperboard products are also captured, including certain corrugated cartons, boxes, paper sacks and bags. Several of those categories face tariffs of 50%, along with certain aluminum foil products.
The impact on individual operators will depend on their supply chains and the ability of distributors to source comparable products from Canada or other countries. Restaurants that rely directly or indirectly on affected U.S.-made supplies could face additional costs once the tariffs take effect.
Quick-service, takeout and delivery-oriented businesses may be particularly sensitive to changes in packaging costs because disposable containers and related supplies represent recurring expenses. Even relatively small increases can become meaningful when multiplied across large transaction volumes.
Restaurants Canada said it is assessing the affected products and plans to seek targeted exemptions where sufficient Canadian or alternative supply is unavailable.
Restaurant Equipment Also Faces Exposure
Equipment represents a different potential source of cost pressure. Canada’s tariff schedule includes a range of refrigeration and freezing equipment, with several categories subject to 25% tariffs, while certain refrigerated cabinets, counters, showcases and related equipment face rates as high as 50%.
Selected ovens, ranges and electric cooking equipment are also included, along with various kitchen products and equipment components. Tariff classifications are highly specific, so the measures should not be interpreted as applying to every refrigerator, oven or piece of commercial restaurant equipment imported from the United States.
For operators purchasing affected products, the tariffs introduce another consideration when replacing aging or failed equipment, renovating locations or building new restaurants. Kitchens, refrigeration systems and other specialized equipment can represent significant capital expenditures, making alternative suppliers increasingly important where U.S.-origin products become more expensive.
“There are still some important issues to address, and we will continue working with government to get those right,” Higginson said.
Restaurants Operating on Narrow Margins
The potential increases come as Canada’s foodservice sector continues to contend with a challenging cost environment.
Statistics Canada reported that food services and drinking places generated $99.6 billion in operating revenue in 2024, up 4.8% from the previous year. Operating expenses reached $95.5 billion, leaving the sector with an operating profit margin of 4.1%.
Cost of goods sold represented 35.9% of industry operating expenses, while salaries, wages, commissions and benefits accounted for another 33.6%. Rental and leasing costs represented 8.1%.
Those figures help explain why incremental increases across several expense categories matter. A 25% or 50% tariff on an individual product does not translate into an equivalent increase in a restaurant’s overall costs, but higher expenses for packaging, ingredients, equipment and transportation can accumulate within businesses operating on relatively narrow margins.
Restaurants Canada has also reported continued profitability concerns among its members and expects inflation-adjusted commercial foodservice sales to decline by 1.1% in 2026. The association reported earlier this year that 44% of restaurants were operating at a loss or breaking even as of November 2025.
Consumers Remain Focused on Value
Passing higher costs directly to customers presents its own challenges. Recent Restaurants Canada research found that more than eight in 10 Canadians consider affordability at least a moderate factor when choosing a restaurant, while half of quick-service customers surveyed said they actively look for promotions, discounts and deals.
Menu-price inflation has also been moderating. Restaurant menu prices increased 2.7% year over year in June, according to research released by the association, representing the slowest pace of increase since 2021.
Restaurants facing higher input costs can attempt to recover some of those expenses through menu pricing, but significant increases risk affecting traffic when consumers are actively seeking value. Avoiding widespread tariffs on high-volume food ingredients therefore removes one potential source of immediate inflation, while exposure to packaging, equipment and selected foods will vary considerably by operator and supply chain.
Restaurants Canada to Pursue Tariff Relief
Restaurants Canada plans to continue working with Ottawa as the impact of the tariff package becomes clearer, including seeking relief for products that cannot readily be sourced elsewhere.
Canada’s existing tariff-remission framework allows the federal government to consider requests where affected goods cannot reasonably be sourced domestically or from non-U.S. suppliers. Relief can also be considered in exceptional circumstances where tariffs could create severe adverse effects on the Canadian economy.
The process could become important for specialized foodservice products where operators, distributors or suppliers have limited ability to quickly change sourcing.
Fuel Costs Add Another Layer
Restaurants Canada is also asking Ottawa to extend the temporary suspension of the federal fuel excise tax on gasoline and diesel beyond September 7. The request comes as the new Canadian counter-tariffs are scheduled to take effect September 8.
The federal excise tax is normally 10 cents per litre on gasoline and four cents per litre on diesel. Its scheduled return would add another cost consideration as restaurants and their suppliers adjust to the new tariff environment.
Fuel costs can move throughout the foodservice supply chain as food and restaurant supplies travel from producers and processors through distributors to individual locations. Restaurants Canada reported in July that 86% of operators surveyed were experiencing higher food and ingredient costs associated with rising gasoline prices, while the same percentage reported supplier fuel surcharges. Another 81% reported increased operating expenses.
The association is encouraging Ottawa to maintain the fuel-tax relief as businesses manage the broader economic effects of the Canada-U.S. trade dispute.
Tariffs Could Accelerate Sourcing Changes
The measures may also prompt restaurant operators, distributors and suppliers to reconsider where affected products are sourced. Canadian-made packaging, equipment and other supplies could become more attractive where sufficient domestic production exists, while importers may look to suppliers in other markets for products currently sourced from the United States.
Changing suppliers can take time. Restaurant chains can have detailed requirements around packaging dimensions, branding, equipment specifications, warranties and food-safety standards, while specialized products may have relatively few readily available alternatives. Those constraints will help determine which tariff categories ultimately create the greatest pressure for operators.
Canada’s restaurant industry represents approximately $125 billion in economic activity and directly employs about 1.2 million Canadians, according to Restaurants Canada. The association says restaurants purchase approximately $43 billion in food and beverages annually, including roughly $30 billion from Canadian suppliers.
“Restaurants are behind the government in standing up for Canada in this trade fight,” Higginson said. “Our focus is on ensuring Canada’s response is as targeted and effective as possible, recognizing the impact these decisions can have on Canadian businesses, jobs, communities and consumers.”
The industry appears to have avoided the broad ingredient shock that could have resulted from tariffs across a much wider range of food products. As the measures take effect September 8, attention will turn to packaging, equipment and selected food categories, along with whether alternative sourcing or targeted tariff relief can prevent those additional costs from spreading further through Canada’s restaurant supply chain.
