Yes, I remember that as well. In 2007 my kids and I were collecting Star Wars miniatures and there were few LGSs that could bring them in, while prices were very high for those that could. I remember ordering cases of them from a Florida retailer and I payed no more than $16 CDN a case for shipping and they'd arrive no later than 10 business days - terrific service! And yeah for sure, that USPS adjustment through a wrench into it.
The biggest inflection points I recall, were the huge publishing industry consolidations in the 1980s and then the mid 90s after Can-USA free trade. Before those we had branch publishing in Canada, whereby UK and USA publishers would have a corporate Canadian branch and much of the printing and binding was done here. So for example, in the 70's we had a Collins Canada and a Penguin Canada (that's Penguin before the big consolidation of US publishers) and a Random House Canada and a Bantam Book Canada. While book prices weren't as good as they were in the UK or USA (think part of that was licensing), they were relatively reasonable.
After the big consolidations in the 80s though, some prices inflated. A few UK publishers acquired US publishers and with a new US corporate presence, shut down their CDN branches. Penguin was one such UK publisher and some US publishers did the same. IIRC it was around that time that the dual prices (US & CDN) started to appear on the back of books. While the difference was noticeable, it was by no means exhorbitant.
Free trade was a bigger game changer though, as it didn't made sense anymore to have a branch in Canada, and I recall more and more books no longer listing Canadian branches in the front pages. It was the late 90's and early millenium when I recall the CDN price on dual listings becoming highly inflated - far higher than the exchange rate. Part of that was no doubt due to flucutations in Can-USA exchange rate will books sat for lengthy periods in distribution warehouses. I'm fairly certain though, that a lot of that highly inflated price had USA-Can distribution overhead baked into it.
I don't think it was entirely the fault of USA publishers, as I seem to recall the CAN Gov't insisting on cultural media protections in the original Can-USA-Mexico (NAFTA) trade agreement. IIRC that inflated the price of USA printed books - I know for sure it did for USA magazines. So yeah there was a series of events over decades that led to the current situation. I personally don't want to see a return to the branch publishing model; even though it created jobs in Canada it slso kept book prices high. If there could be a silver lining to the current cloud, it'd be that more direct UK-Canada distribution of UK books (and ERUO-Can distribution for Euro published) would evolve.
[Edit] As to Print On Demand, IMO it makes sense for it to be done in-country. And not just for Canada.