U.S. duty-free exemption for online purchases now 40 times Canada's

WASHINGTON -- Americans are now allowed to spend more than 40 times as much as their northern neighbours without paying duty on products shipped from abroad, as a result of a new law.

See Full Article

Last week President Barack Obama signed a bill vastly expanding the duty-free exemption for products imported by mail -- the new US$800 limit quadruples the previous amount, which was already multiple times higher than Canada's C$20 exemption.

There's pressure on the Canadian government in the runup to Prime Minister Justin Trudeau's trip to Washington to narrow that gap, with the pressure coming from pockets of the U.S. government and industry.

One business group has even sought to enlist Canadian customers by circulating an online petition asking people to add their names if they want to stop paying what it calls an unfair duty.

"The gap is unsustainable in our integrated economy," said Maryscott Greenwood of the Canadian American Business Council, which started the petition.

"Canadians we hear from see it as a fundamental issue of fairness. Why should Canadians pay duty on the very same items Americans buy duty free?"

She and a U.S. federal source said American officials are raising the so-called "de minimus" issue with their Canadian counterparts as they prepare for Trudeau's state visit next month.

The Canadian government has grappled with the issue before.

As the House of Commons Finance gathered advice for the 2014 budget it received a submission from eBay -- one of the biggest potential winners of a relaxed duty exemption.

The online retailer said Canada's standard was far stricter than most other countries and was due for a revision, given that the $20 amount hadn't been revised since 1985.

It said an increase would boost mail delivery, save Canada Post millions in administrative costs, and spare consumers from the sticker shock that occasionally comes with online imports.

The government received similar advice from the Senate Finance committee in 2013, which recommended a review of the de-minimus threshold.

The committee pointed to claims from the Canadian Association of Importers and Exporters, which said the average fee charged by most courier companies or customs brokers is $25, and that Canadians paid more than twice their American neighbours for a $21 online imported product back when the dollar was at par.

Canadian retailers have fought the change. They warn that it would come with a cost.

The Retail Council of Canada identified several potential negative consequences of a de-minimus increase, and expressed relief that last year's federal budget avoided such a change.

"(It) would lead to massive increases in cross-border orders, with the obvious negative consequences for Canadian retailers and their employees," the council said in reaction to the budget.

"Even a seemingly small increase could have a major impact."

It said the federal and provincial governments would suffer a substantial revenue loss. It also argued that such a move would be a disincentive for Canadian companies to hire IT workers and invest in bricks-and-mortar businesses at home.

"(We do) not understand the political or economic calculus that would confer a tax and duty advantage (as high as 33 per cent in some cases) on a U.S. warehouse seller who employs few if any people in Canada, at the cost of a Canadian employer who does create jobs and economic activity here."

Greenwood suggested a phase-in period might be a reasonable idea, if there's concern in Canada about introducing the measure amid economic uncertainty. However, she added: "I don't think it's anti-stimulative to lower the costs of goods that Canadians are already buying."


Latest Economic News

  • Can Facebook restore public trust after privacy scandal?

    Economic CTV News
    CHICAGO -- It's a scandal of privacy, politics and an essential ingredient of business success -- public trust. Facebook is confronting a costly, embarrassing public relations debacle after revelations that Cambridge Analytica may have misused data from some 50 million users to try to influence elections. Source
  • China tells U.S. it will defend interests after Trump tariffs

    Economic CTV News
    BEIJING -- China's newly appointed economic czar told U.S. Treasury Secretary Steven Mnuchin on Saturday that Beijing is ready to defend its interests after U.S. President Donald Trump announced plans to slap tariffs on nearly US$50 billion in Chinese imports. Source
  • The biggest loser in a trade war between China and the U.S.? It's you (but don't worry about it)

    Economic CBC News
    The old adage tells us no one wins a trade war. So, the next logical question is: Who loses? Well, the short answer is — you do. Consumers have been the clear beneficiaries of globalization. Cheap stuff has flooded into North America at a historically unprecedented rate. Source
  • What's being done with your data: Experts ask, shouldn't someone get this under control?

    Economic CBC News
    Now that Facebook, Google and Amazon know pretty much everything about us, how they're using that information is drawing the focus of politicians throughout the Western world, asking in effect: "Shouldn't something be done about this?" Source
  • Bombardier executive compensation hits US$33.4 million in 2017

    Economic CTV News
    MONTREAL -- Bombardier's executive compensation rose seven per cent to US$33.4 million in 2017, according to a circular released ahead of the company's May 3 annual meeting. The increase comes after a year marked by improved results, but also by the Airbus takeover of the C Series program without the company having to pay a single cent. Source
  • U.S. sets May 1 tariff threat on Canada, Mexico amid rush to speed up NAFTA talks

    Economic CBC News
    The United States has just applied additional pressure in its rush to get a new NAFTA agreement within several weeks, establishing a May 1 deadline, after which Canada and Mexico would face tariffs on steel and aluminum. Source
  • United Airlines gives $10,000 voucher to traveller on overbooked flight

    Economic CBC News
    A passenger who was bumped off a full flight has scored the maximum prize — a $10,000 US travel voucher. A spokesperson for United Airlines confirmed Friday that a passenger got the big voucher, but he didn't name the person. Source
  • Canadian retailers could be boosted by a U.S. trade battle with China

    Economic CTV News
    MONTREAL -- U.S. President Donald Trump's plan to impose tariffs on up to US$60 billion of Chinese imports could help Canadian retailers by further easing cross-border shopping, even though a full-fledged trade war between the world's two economic superpowers would damage Canada's economy, experts say. Source
  • CRA audits just 5 Canadians out of hundreds of RBC Panama Papers accounts

    Economic CBC News
    Two years after it took aim at hundreds of Royal Bank clients exposed in the Panama Papers leak, the Canada Revenue Agency has decided just five cases require an audit. That's because most of the offshore accounts it unearthed ended up belonging to foreigners, the CRA says. Source
  • Manulife mix-up: $170K retirement nest egg transferred from account without warning

    Economic CTV News
    A Toronto woman’s retirement nest egg was transferred out of her RRSP account after Manulife Financial wired more than $170,000 to a foreign third-party stock transfer company, putting the funds in limbo amid an ongoing spat with the financial services giant. Source