I'm sorry, but that's not how things work in the real global world.
Say Canada does what you say will fix everything, and adds extra taxes so that there's less money to spend, so in theory demand will go lower because there would be less money, and in theory supply will increase, and thus suppliers would have to lower prices to meet consumers. Econ 101, right? Wrong, you should have continued past that chapter.
First, we're talking about inelastic goods. Food, energy. There's very limited elasticity there - you can choose to conserve energy and eat cheaper food, but in the end, you need electricity, warmth and food or you'll die, so there's only so much you can be elastic in your demand. Less money to spend due to higher taxes means choosing between eating rice for a week or uncomfortable cold going to freezing depending on place and season. (Until magically the market fixes itself, right? Wrong.)
Second, we're talking about global markets. If Canadians have less money to spend on wheat and corn and substitutes, or vegetable oils, or oil and gas, well, someone else will buy them on the global market. Even the local producers, unless they're forced to otherwise, or they're feeling really nice. There is more demand than there is supply for those specific, rather inelastic, items that the whole world needs and consumes, and which are heavily impacted by the Russian invasion of Ukraine. Which has also had ramifications such as Indonesia, one of the biggest exporters of palm oil, stopping exports due to rising vegetable oil prices globally (due to the war), to protect the local market by having locals buy local palm oil as a replacement for the expensive imported other oils.
> Say Canada does what you say will fix everything
If you thought I was saying it would fix anything except the number on the price tag, you must have misinterpreted my comment.
> and in theory supply will increase
I don't believe an increase in taxes would cause supply to increase.
> there's only so much you can be elastic in your demand.
Demand doesn't only mean how many loaves of bread people want, or how badly they want them. It's also how many dollars they can and will pay. Picture goods being sold at an auction, as they essentially are. With fewer dollars in everyone's pockets, the winning bid will be lower, even if the bidders are just as hungry.
> I don't believe an increase in taxes would cause supply to increase.
Sorry, i meant increase proportionally to demand (because demand would go down, so there would be more supply than demand).
> With fewer dollars in everyone's pockets, the winning bid will be lower, even if the bidders are just as hungry
Not if the winning bid comes from another country, or the supplier can afford to wait (because remember, we're talking about inelastic goods - the supplier knows people need to eat and heat themselves).
Say Canada does what you say will fix everything, and adds extra taxes so that there's less money to spend, so in theory demand will go lower because there would be less money, and in theory supply will increase, and thus suppliers would have to lower prices to meet consumers. Econ 101, right? Wrong, you should have continued past that chapter.
First, we're talking about inelastic goods. Food, energy. There's very limited elasticity there - you can choose to conserve energy and eat cheaper food, but in the end, you need electricity, warmth and food or you'll die, so there's only so much you can be elastic in your demand. Less money to spend due to higher taxes means choosing between eating rice for a week or uncomfortable cold going to freezing depending on place and season. (Until magically the market fixes itself, right? Wrong.)
Second, we're talking about global markets. If Canadians have less money to spend on wheat and corn and substitutes, or vegetable oils, or oil and gas, well, someone else will buy them on the global market. Even the local producers, unless they're forced to otherwise, or they're feeling really nice. There is more demand than there is supply for those specific, rather inelastic, items that the whole world needs and consumes, and which are heavily impacted by the Russian invasion of Ukraine. Which has also had ramifications such as Indonesia, one of the biggest exporters of palm oil, stopping exports due to rising vegetable oil prices globally (due to the war), to protect the local market by having locals buy local palm oil as a replacement for the expensive imported other oils.