It may be time to consider bidding adieu to the time-honoured tradition of the Trader Joe’s day trip.
With Canadians facing a 25 per cent surcharge on most American goods brought back over the border, a weak exchange rate, and the threat of scrutiny by U.S. border agents, the once-beloved pastime may no longer be worth the trouble.
“You’re actually looking at paying an additional 55 or 60 per cent more using your Canadian dollars right now,” said Daniel Tsai, adjunct professor of business at the University of Toronto, who called the measures “prohibitive” to Canadian consumers. “It’s just another disincentive to buy American.”
Here’s what to know about the surcharge on American imports.
What’s the 25 per cent surcharge?
The 25 per cent surcharge, in effect since March 4, was introduced by Canada in response to U.S tariffs.
It applies to all U.S. goods imported into Canada for commercial use, along with personal use products that exceed preset personal exemptions. For example, if you spend $1,000 over your predetermined exemption amount, you would be charged applicable duties, GST and a $250 surcharge on top of the value of the import itself.
Products subject to the surcharge include certain clothing and accessories, food items, furniture, beauty and makeup products, toiletries, perfumes and more. A complete list of goods subject to the surcharge is available on Finance Canada’s website.
The move has already seen “serious knock down effects” in the U.S., says Tsai.
“We’re seeing a drop in trips to the U.S., flights being cancelled, and consumers turning to Canadian-made products,” he said.
The CBSA says the measures will remain in place until the U.S. eliminates its tariffs against Canada.
Do I have to pay the surcharge if I’m just going for the day?
Yes. Anyone who spends less than 24 hours in the U.S. is not eligible for an exemption and will be made to pay the surcharge on goods brought back over the border.
What about overnight stays?
If you’re planning on staying in the U.S. longer than 24 hours, the duration of your trip will dictate how much you can bring back over the border while avoiding the surcharge.
If your trip is less than two days, you can claim up to $200 in imports on your way back into Canada without paying the extra 25 per cent. To claim the exemption, your time in the states must be a minimum of 24 hours. “For example,” the CBSA says on its website, “if you left at [7 p.m.] on Friday, you may return no earlier than [7 p.m.] on Saturday to claim the exemption.”
On trips of more than two days and up to seven days, you are allowed up to $800 in surcharge-free imports, so long as all goods are in your possession at the time of re-entry.
For stays of more than seven days, a $800 exemption is also extended, but the requirement to have all the goods in your possession upon re-entry is lifted, except in the case of alcohol and tobacco. Whether in possession of the imports at the time or not, you must still report all purchases to a border officer upon your return.
Are there other conditions for exemptions?
Yes. The exemptions are only extended to personal-use items, such as souvenirs, gifts or household items. Items intended for commercial use do not qualify and will be subject to the surcharge regardless of the duration of your trip.
You also cannot combine your personal exemptions — for instance, during a 9-day trip to the U.S., you are not permitted to combine a two-day exemption of $800 with your seven-day exemption of $800 for a total of $1,600 in exemptions. You can’t combine your exemption with another person’s exemption in your party or transfer them to someone else.
What about alcohol products?
Exemptions for alcohol and tobacco products are not extended to trips under 48 hours.
If you have been away from Canada for two or more days and are of legal drinking age, you are allowed to import one of the following, free of duties and taxes.
- Up to 1.5 litres of wine;
- Up to 8.5 litres of beer or ale; or
- Up to 1.14 litres of other alcoholic beverages or liquor.
If the amount of alcohol you want to import exceeds what is outlined above, you will be required to pay all corresponding duties and taxes, as well as any provincial or territorial levies that apply.
The quantities of alcohol you can import, exemption or not, must be within the limit set by the province or territory where you will enter Canada.
And tobacco?
Exemptions on tobacco are also only extended to trips of two days or more.
If you have been away from Canada for more than two days and are 18 years of age or older, you can import all of the following, free of duties and taxes.
- Two hundred cigarettes;
- Fifty cigars;
- Two hundred grams of loose tobacco; and
- Two hundred tobacco sticks.
What if I buy items while in the U.S. and ship them back to Canada?
Online or not, if you purchase items while in the U.S. and plan to have them shipped to Canada ahead of your return, their value must not exceed $800, and the shipment cannot include alcohol or tobacco.
You will have 40 days from the date of your return to claim your goods.
If you’ve shipped items from the U.S. home, you must inform a border services officer and request a Personal Exemption Declaration form. The CBSA says to make sure you keep a copy of the form until you have received your shipment.
Does the point of entry affect the process?
No matter your point of entry into Canada, you will face a surcharge on eligible imports.
What about the exchange rate?
Trump’s trade war saw the loonie drop to its lowest levels in more than 20 years in February.
In turn, shoppers can expect a “major hit” on the exchange rate when shopping south of the border, says Tsai, and even higher costs when they return.
“The value of the Canadian dollar has definitely gone down compared to the American and that adds a huge amount of cost to what you’re purchasing,’ he said. “If you’re paying $100 for something in the U.S., its value is actually like $45.”
Is it safe to cross the Canada-U.S. border right now?
Starting Apr. 11, foreign nationals visiting the U.S. for more than 30 days will need to register at their port of entry.
In turn, the Canadian government has amended its travel advisory for the U.S., clarifying that Canadians should “comply and be forthcoming in all interactions” with U.S. border agents and expect “scrutiny at all points of entry, including of electronic devices.”
Border agents reviewing entries are permitted to search all bags and luggage, vehicles, and personal devices while determining eligibility to enter the country. Any of that property can be seized if deemed suspicious by an officer. If you choose not to show them, you can be refused entry altogether, or even banned.
“There are just a lot of questions related to crossing the border right now,” Tsai said. “The fact of the matter is, if you cross the border, you’re subject to having your personal devices — laptops or phones — being searched. So the question becomes: do people want that to be part of their shopping experience? I don’t think they do.”
“Nobody wants to shop somewhere where the environment is hostile.”
With files from Reagan McSwain and The Canadian Press.
