P&G says Canada denies tariff exemptions, many products hit

FILE PHOTO: The logo for Procter & Gamble Co. is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 27, 2018. REUTERS/Brendan McDermid

By Richa Naidu

CHICAGO (Reuters) - Many Procter & Gamble Co (NYSE:PG - News) products sold in Canada - from Febreze candles to Gillette shaving foam - will be affected by retaliatory tariffs on U.S.-made goods after Canadian authorities rejected a request for exemptions, a P&G spokesman said on Wednesday.

P&G said Bounty paper towels, Charmin toilet tissue and Puffs facial tissue - made in a facility in Mehoopany, Pennsylvania - would be taxed, as would Cascade automatic dish washing detergent, Febreze aerosols, Pantene hair sprays and Olay body wash and more.

"The vast majority of our Canadian products are imported from the U.S.," P&G spokesman Damon Jones told Reuters.

Jones said P&G had unsuccessfully petitioned the International Trade Policy Division of Canada's Department of Finance for exemptions on its products. Exemptions occurred in some consumer packaged food categories, he added.

"The Canadian government has deemed that these P&G products are non-essential and therefore does not need to grant exemptions on them," said Burt Flickinger, managing director of consultancy Strategic Resource Group. All major consumer packaged goods companies with U.S. operations will have applied for similar exemptions, Flickinger added.

"The selection of products on the final list was informed by the feedback we received from Canadians, as well as our government's internal analysis," said Pierre-Olivier Herbert, a spokesman for Canadian Finance Minister Bill Morneau, whose department is responsible for granting such exemptions.

This month, Canada struck back at the Trump administration over U.S. steel and aluminum tariffs, imposing taxes on C$16.6 billion of U.S. packaged goods, steel and aluminum products.

It levied a 10 percent surtax on a wide range of consumer goods from soup and whiskey to hair-care and manicure products, according to a list by the Department of Finance.

P&G, the second-largest packaged goods company in the world after Nestle SA (:NESN.S), said Canada accounted for about 3 percent of its total revenue of $65.1 billion last year. This amounts to just under $2 billion in sales from Canada, according to Reuters calculations.

Nestle had no immediate comment on how tariffs would affect its business, while Anglo-Dutch rival Unilever Plc (LSE:ULVR.L - News) declined to comment

Like other global consumer companies, P&G is already under pressure to boost sales as consumers flock to fresher products and newer brands.

"We believe in free trade, putting us and our international competitors, wherever they are, on an equal playing ground. Tariffs create a barrier to that," Jones said.


(Reporting by Richa Naidu. Additional reporting by David Ljunggren in Ottawa and Martinne Geller in London; Editing by Steve Orlofsky)