Why some Canadian holiday shoppers will have to pay more for certain items from the U.S.

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Canadians who join the holiday shopping bonanza in the United States might be in for a nasty surprise when they return home, due to a 10 per cent tariff on certain items at the border.

Some shoppers can expect to pay an additional fee at the border for Black Friday blowout items such as American-made refrigerators or washing machines, among other things, amid the ongoing trade war between Canada and the U.S.

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The 10 per cent surtax applies to a wide range of U.S.-origin grocery and consumer products, including bourbon, kitchenware, mattresses, toilet paper and large appliances.

Each Canadian shopper is allowed to claim a certain amount worth of purchased goods without paying duty or surtax, based on how long he or she has been in the U.S. The exemption only applies to people who have been absent from Canada for longer than a day (up to C$200) or longer than two days (up to $800).

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Any purchases beyond the limit would be subject to the surtax. Canadians who visit the U.S. for a same-day shopping trip can’t claim any duty-free goods.

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Canada introduced tariffs on more than 200 items over the summer, in retaliation for U.S. President Donald Trump‘s 25 per cent tariff on imported steel and 10 per cent tariff on aluminum. Canada hit back with matching tariffs on steel and aluminum products, plus a 10 per cent tariff on many other significant American products.

“It’s probably off the radar of most consumers,” Mike Mulvey, a professor of marketing at the University of Ottawa, told Global News on Friday. Mulvey says the surtax might change a few people’s minds about shopping, but he doesn’t expect it to have a major impact on cross-border shopping.

“There are so many other things that are motivating the desire to go shopping [in the U.S.],” said Mulvey, who has studied cross-border shopping patterns for the last five years.
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He says most people who buy products in the U.S. do it because of the wider selection of products, or because they’re already travelling in the country.

“If it’s a good you can only get in the United States or the price gap is large, [the surtax] is not going to matter in the end,” Mulvey said.

Holiday shoppers are unlikely to face the 25 per cent surtax at the border unless they’re buying steel bars, pipes or wire from the U.S. However, they will be forced to pay the 10 per cent tariff for anything on Canada’s list of affected goods.

A full list of applicable items can be found on the federal government’s website.

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When do I pay?

Shoppers are expected to pay tariff surtaxes along with regular duties when they go through Canadian customs at the border. The surtax is calculated “as a percentage based on the value for duty of the imported good,” the CBSA website says.

Mulvey says border guards will occasionally wave drivers through without checking their purchases for applicable duty charges.

“Sometimes it’s because of the hassle,” Mulvey said. He added that border guards will likely be particularly busy through the U.S. Thanksgiving weekend.

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Mulvey says paying the surcharge is fairly easy. “You’ll have to wait in line and they’ll look up the item and look at its country of origin … fill out the form and you pay, and then you’re done.”

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Does it matter where my purchases are made?

The CBSA will apply the surtax if an item is labelled as a U.S. product, or if it does not list its country of origin. Shoppers must be able to prove an item did not originate in the U.S. in order to avoid the tax, the CBSA says.

The Canadian government expects it will tax up to $16.6 billion worth of imported steel, aluminum and other products from the U.S. annually, while the tariffs are on the books.

How long will this go on?

Canada says the retaliatory tariffs will remain in place as long as the American ones are in effect.

Canada has pushed for the United States to drop its tariffs now that the two sides and Mexico have agreed to a replacement for NAFTA, dubbed USMCA. However, Prime Minister Justin Trudeau recently indicated that he might still sign the deal with the tariffs in place.

Trudeau told CNN’s Poppy Harlow that the tariffs are a “continued frustration” for his government earlier this month.

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“We would much rather have genuine free trade with the United States so we’re going to continue to work as soon as we can to lift those tariffs,” Trudeau said.

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“But we’re not at the point of saying that we wouldn’t sign it if it wasn’t lifted, although we’re trying to make that case.”

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