Blueberries grown in Mexico. Coffee beans from Colombia.
Even if goods are sourced from other nations, many Canadian suppliers rely on American trucking routes, railways and ports to transport these goods.
And whether these stopovers mean products passing through the U.S. are subject to American tariffs is unclear.
The confusion only adds to the shocks felt throughout the nation’s manufacturing and food industries caused by U.S. President Donald Trump’s decision to slap — and then suddenly pause — 25 per cent tariffs on all Canadian imports into the U.S.
Late Thursday, Trump again pushed back the start date for the trade penalties reminiscent of his first 11th-hour stoppage back in February.
While most trade experts believe goods in-transit through the U.S. would not be subject to Trump’s tariffs, Peter Morrow, a University of Toronto professor who studies Canada-U.S. trade relations, suggested these items would, based on language used in Trump’s original executive order.
According to the president’s Feb. 4 order, “no drawback shall be available with respect to the duties imposed pursuant to this order.”
A drawback, Morrow explained, is a refund given to importers to waive the custom fees their goods receive upon entry into the U.S.
It is given when a good is exported out of the States.
Because Trump’s order bans drawbacks on all goods subject to the 25 per cent tariff, Morrow said it means anything simply passing through the U.S. en route to Canada will be taxed.
“There is specific language in the Feb. 4 executive order that is different from normal policy,” he added.
But not everyone agrees with Morrow’s interpretation.
Richard Lee, executive director of the Ontario Greenhouse Vegetable Growers, said drawbacks are only applied when duties on an item would need to be refunded, typically due to damage sustained in shipment.
Instead, Lee said, most products are “bonded,” meaning they are kept sealed while travelling through the U.S. and therefore not subject to any duties or tariffs.
“The only time you are paying that tariff is if it is staying in the U.S.”
Other trade experts were less sure than Morrow or Lee, but said that duties are typically not slapped on goods that pass through the States en route to Canada.
“I don’t believe so,” Ananth Ramanarayanan, a Western University business professor, said, “If things are not unloaded, then they’re not recorded as imported into a country.”
Katherine Hopewell, a public policy professor at the University of British Columbia with knowledge on international trade, said tariffs usually depend on the country of destination for a good.
“If a good is destined for the U.S. market, then a tariff is applied,” she said. “If it’s just passing through the U.S. on the way from Mexico to Canada, then there wouldn’t be a tariff applied.”
