In Canada, we all know the feeling: you fill your online shopping cart, go to checkout, apply your discount codes, then watch the price of your order skyrocket as you’re hit with all the duty, taxes and exchange the government can throw at you. Your $25 online order just doubled because you want to bring the item into Canada. You probably didn’t know that moment of agony at checkout is due to a little thing called the de minimis rule and that our negotiations with the U.S. over NAFTA this week just might make it easier on us.
De minimis (Latin for ‘about minimal things’) is the amount below which imported goods are not subjected to duty. Right now in Canada, anything you purchase from the States that has a value over $20, is subjected to duty. That is in severe contrast to both the U.S. and Mexico whose de minimis are $800 and $300, respectively. One of the things Trump wants out of these negotiations is for Canada to raise its de minimis.
If the de minimis were to go up for Canada, that opens up a whole new world of things you can buy without having to pay duty. The amount was put in place in the 80s, long before online shopping was a thing. At the time, people didn’t have very much opportunity to shop from the States–it was pretty much just out of the Sears catalogue. With online shopping, a $20 limit just doesn’t make sense anymore and Trump wants us to change it.
Here’s the sinister side (this is politics, of course there’s a sinister side): the de minimis was put in place as an incentive to buy local. When you have to pay extra to import, you’re more inclined to shop around in Canada first. Donald Trump has said that he believes the U.S. has the raw end of the deal in NAFTA so his motivations for raising Canada’s de minimis is that he wants to encourage Canadians to buy from the U.S. In the long run, this could hurt Canadian businesses and the Canadian economy because instead of spending money locally, you’re sending it directly to the states.
So what’s the likelihood of this happening? Pretty good, according to experts. With bigger things on the bargaining table like steel and softwood lumber, the de minimis rate could be a good bargaining chip for Canada during the negotiations. So maybe don’t cash out that cart you’ve been building up for a few months. You might be in for a little discount.