Canadian dollar stays strong, but prices still high

 

The Canadian dollar (CAD) has been relatively stable for a while now and has been hovering just below parity with the US dollar (USD). The CAD has been in the $0.95-$0.99 range for some months now with only short periods out of this range. Some parts of the Canadian economy are impacted negatively by this strong dollar, although many companies have been able to adjust how they do business since it has been a while now with the close-to-parity exchange rate. Exporters are generally the most impacted in a negative way by a strong dollar; however, American exporters to Canada tend to do better when the Canadian currency is close to par with the USD.

Interestingly enough, if you compare prices for many items in Canada and the US, you will see a substantially larger gap than just the exchange rate difference. For many products, prices in Canada are higher than those in the United States. Some companies even give the reason for charging Canadians more due to ”the higher cost of doing business in Canada”. While that may be true for select industries, especially ones affected by Canada’s large ratio of land to population size, most businesses have no increased cost by doing business in Canada; at least not to the extent that the higher prices would suggest.

Although there are many, many examples I can choose from to illustrate the point, the automobile industry is the most obvious and significant one. By looking at a run of the mill family car- the Honda Accord, the price difference between the US and Canada is unnecessarily larger than it needs to be. For the exact same car, the US purchase costs 85% of the Canadian purchase. Under this calculation, for it to be equal in both countries, the CAD would have to be at $0.85, but it is actually $0.10-$0.14 higher and that difference means Canadians are paying more. If you buy a car in the US, you are getting an approximate 10% discount. This is a lot when you consider that a new car costs about $30,000.

The main reason for this is unfortunately Canadians’ willingness to pay and be taken advantage of. That’s right, Canadians have no one else to blame but themselves (and maybe the government a little bit) for paying more for the same products as our American counter-parts. Canadians do not complain enough and force companies to price products more fairly like Americans do. Americans do not care to be polite when they are being gouged on price and this is a trait that Canadians should develop. Even in the big city of Toronto, where competition is fierce and the purchasing power is high, Canadians routinely pay too much for items they can sometimes by online through the US website of the same company and pay less, even if shipping isn’t free.

In most cases Canadians and Americans are the same, in some cases Americans can learn from Canadians and in some (especially this case), Canadians can and should learn from Americans.