Advertisement

Reality Check: No, Canadians aren’t ‘smuggling’ shoes across the border due to ‘massive’ tariffs

Click to play video: 'Trump complains that Canada ‘treats us horribly’ on trade' Trump complains that Canada ‘treats us horribly’ on trade
WATCH: Speaking at the National Federation of Business Tuesday, U.S. President Donald Trump acknowledged the centuries of friendship before complaining that Canada "treats us horribly" on trade – Jun 19, 2018

U.S. President Donald Trump commented on Tuesday that Canadians were “smuggling” shoes from the U.S. into Canada due to “massive tariffs,” but experts are calling this statement “incredibly misleading.”

People living in Canada are coming to the United States and smuggling things back into Canada because the tariffs are so massive,” Trump said Tuesday. “The tariffs to get common items back into Canada are so high, that they have to smuggle them in.

Story continues below advertisement

“They buy shoes and then they wear them. They scuff them up. They make them sound old or look old,” the president said.

However, while many Canadians are guilty of bringing products across the border without paying the appropriate fees attached, the reasons for this have little to do with tariffs, explained Walid Hejazi, an associate professor at the University of Toronto’s Rotman School of Management.

“It’s incredibly misleading. It is true that many Canadians go into the U.S. to do shopping, and they do not declare these things returning to Canada for a multitude of reasons,” Hejazi explained.

READ MORE: Donald Trump claims Canadians are ‘smuggling’ shoes back to Canada because tariffs are so high

He emphasizes that any products made in North America, with the exception of a few, are not subject to any tariffs at all when being brought over the border. In the case where the item purchased was not manufactured in North America, not declaring the purchase stems more frequently from uncertainty about what needs to be declared and a reluctance to go through the hassle of doing so at the border.

In addition to the tariffs on products not made in North America, Canadians would also have to pay Canadian taxes on these products, should they declare them. Hejazi explained that each set of fees would likely amount to approximately CDN$40 each.

Story continues below advertisement

“The vast vast majority of goods and services across the Canada-U.S. border are not subject to tariffs. If they’re made in North America, there’s no tariffs. They would just cross the border freely, but if they’re made outside, there is a tariff, but they vary by product,” he said.

The bottom line, said Hejazi, is that Trump’s claim that Canadians are smuggling shoes and other items across the border to avoid “massive tariffs,” is simply false.

“It’s not true. The statement is not true that Canadians are wearing shoes and scuffing them up and bringing them back into Canada because of the massive tariffs,” he said, and went on to call the argument “completely disingenuous,” he concluded.

Greg Anderson, an associate professor in the political science department at the University of Alberta, added that he suspected Trump was referring to the personal duty exemption limits imposed by the Canada Border Services Agency (CBSA) when Canadians return from trips abroad. Depending on how long they’ve been out of the country, they are able to claim a certain amount on tax and duty-free basis.

Story continues below advertisement

Anderson adds that this is something that’s been on the “U.S. hit-list of Canadian barriers to trade for many years.”

He suggests, however, that the reason these policies irk the U.S. president is that the limits are “rather low.”

“These limits are rather low and are designed mainly to disincentivize Canadian cross-border shopping, or to protect merchants and firms on the Canadian side. In other words, if you have a low tax/duty limit and live in Southern Ontario, you are unlikely to slip across the border and grab a pair of running shoes in Buffalo and scuff them up (as Trump says) so you can “smuggle” them through Canada Customs,” Anderson said in an emailed statement.

Story continues below advertisement

Trump made these comments while addressing the National Federation of Business in Washington. This comment marks the latest in a long line of insults aimed at Prime minister Justin Trudeau and at Canada in general since the G7 Summit concluded earlier this month. The summit took place shortly after the president announced new tariffs on Canadian steel and aluminum imports, which Trudeau followed up with CDN$16.5 billion in retaliatory tariffs, to come into effect on July 1 of this year.

Sponsored content