Why does everything cost so much more in Canada?

Target’s plans to charge higher prices in Canada than in the U.S. triggered a new round of grumbling about the Canadian–American price gap last month. Now, a Senate committee report on the issue has made the country’s consumers—and consumer journalists—even more fired up. The report’s most anger-inducing section describes “country pricing,” the system by which manufacturers charge Canadian retailers 10 to 115 per cent more on wholesale products on the grounds that sucker Canadians are simply willing to pay more (the retailers pass the higher costs along to consumers). Higher customs tariffs, fewer economies of scale and higher transportation costs also contribute to Canada’s steep prices—though Diane Brisebois, president of the Retail Council of Canada, told CBC’s Marketplace that those factors should only raise wholesale prices by five or 10 per cent. On the upside, the committee found that U.S. and Canadian prices will converge as more Canadians start to compare prices using smartphone apps and websites—which should put competitive pressure on manufacturers and retailers. We hope.