U.S. President Donald Trump has unleashed another attack against Canada, accusing this country of so unfairly charging duties on U.S. goods that Canadians are driven to smuggle consumer items across the border between the two countries.
Speaking to a gathering of small-business owners in Washington, the President painted a picture of how he believes Canadian protectionism has turned its citizens into scofflaws.
“The tariffs to get common items back into Canada are so high that they have to smuggle them in,” Mr. Trump told the National Federation of Independent Business on Tuesday.
“They buy shoes, then they wear them. They scuff them up. They make them sound old or look old,” he explained. Mr. Trump cited an unidentified “major newspaper” as the source of this information.
He did not indicate how this harms U.S. businesses, but went on to link this conduct to negotiations on the North American free-trade agreement (NAFTA), saying the United States will not be treated poorly by Canada any longer. “Canada is not going to take advantage of the United States any longer.”
Mr. Trump appears to be referring to duty-free exemption rules affecting Canadian travelers who visit the United States. Canadians are eligible for duty-free exemptions only if they have been out of Canada for at least 24 hours. If they visit the United States for a few hours of shopping, they must pay duties, where applicable, and Canadian sales taxes. If the goods are manufactured in the United States, then only sales taxes apply.
By comparison, Americans returning to the United States from Canada are granted duty-free exemption of US$200 for any absence from their country of less than 48 hours.
Cyndee Todgham Cherniak, a trade expert, said Mr. Trump is wrong to suggest border charges are anti-American. Canadians do not pay duties on U.S.-made goods when they bring them back to Canada; they merely pay the harmonized sales tax or goods and services tax. The duties charged at the border are for imports of goods manufactured offshore.
Separately, Foreign Affairs Minister Chrystia Freeland told MPs she believes a deal to renegotiate NAFTA is still possible despite the punitive tariffs the Trump administration has slapped on Canadian steel and aluminum in the name of national security.
She confirmed that the United States is still insisting a new NAFTA deal have a five-year expiry clause.
But Ms. Freeland said NAFTA talks are on a separate track from the trade war over steel and aluminum. Starting on June 1, the Americans imposed import taxes of 25 per cent on Canadian steel and 10 per cent on Canadian aluminum, using a national security provision of U.S. trade law that Prime Minister Justin Trudeau and Ms. Freeland called ridiculous and insulting treatment of a close military ally.
Canada is still preparing dollar-for-dollar retaliation on $16.1-billion of U.S. goods to take effect on July 1. “We know that no one will benefit from this beggar-thy-neighbour approach to trade,” Ms. Freeland said. “The price will be paid, in part, by American consumers and by American businesses. And I think we all agree that it is important for Canada to stand up in defence of the international rules-based order, and we will do so.”
Ms. Freeland told the Commons international trade committee on Tuesday that Canada is still revising the list of possible retaliatory targets based on feedback from businesses.
The list includes U.S. steel and aluminum and goods from sailboats to whisky, plywood to refrigerators and washing machines to herbicides.