When U.S. President Donald Trump threatened tariffs on Canadian goods last week, his executive order also included eliminating a tax exemption that’s been in place between the USA and Canada for nearly a century.
The new rule could hurt some Canadian small businesses who rely on their American clientele. For nearly 100 years, Canadian companies have used what’s called the de minimis exemption.
“Basically, it just allows for low-valued goods to go across the border without having to face any duties or taxes or tariffs,” said Michelle Auger, senior policy analyst with the Canadian Federation of Independent Business (CFIB).
The exemption allows Canadian businesses to ship goods under $800 to the U.S. duty free.
Glen Briggs and his wife run two businesses out of his woodworking shop in Morewood, Ont., located about 45 minutes south of Ottawa. While most of their custom orders stay in Canada, several of them destined south of the border could soon have an added tax.
“If there is duty at the other end, we may not know about it… The customer at the other end is going to be the one that’s going be hit with a duty, and that will be their last order from us," said Briggs.
Cindy Laneville ships her mosaic glass creations out of Winchester, Ont. Changes to the de minimis exemption could put future orders to the U.S. in limbo.
“My position is it’s a wait and see. That’s quite frankly the only thing I can do at this point,” added Laneville.
In a month’s time, if Trump’s executive order slapping a 25 per cent tariff on Canadian goods becomes a reality, the de minimis exemption would also be scrapped.
“If you’re shipping books, for say to a U.S. client, that U.S. client would then be responsible for paying the taxes and duties,” said Auger.
