Regardless of justifications by Canadian authorities, Augusto Beato insists that higher de minimis rates would push Canadian bricks-and-mortar retailers to the wall due to increased online competition.
“Canada buys more from the United States than any other country in the world, and the new rate would increase online transactions by Canadian from American online companies," Beato, the CEO of Portland SEO, insists.
Beato added that the new rate would create two different tax treatments, with the advantageous one being applied to an external shipper who sends goods into Canada.
He also warned of a finding by a study conducted by PricewaterhouseCoopers Canada that found that if Canada raised its de minimis threshold to just $200, there would be a loss of 286,224 jobs and $10.2-billion in government revenue.
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Beato was reacting to justifications by Canadian authorities and experts about the benefits of the increased rate to Canada.
Daniel Schwanen, an author of a study by the C.D. Howe Institute, said that with the new higher rate, Canada would need to spend fewer resources on border services to check incoming goods.
“They would collect fewer duties, but the costs [for border services] would be lower,” he said.
Bank of Montreal senior economist Sal Guatieri said studies show that consumers would benefit by saving money on US imports, and would receive products quicker because of less friction with cross-border shipments.
The United States is using the talks to try to get Canada to raise its so-called "de minimis threshold" – the level below which goods are given exemptions from duty and sales tax. Canada's duty-free threshold of $20 has been the same since 1985 and is now among the lowest in the industrialized world.
The US has negotiated a tentative side deal with Mexico that raises the de minimis threshold to $100 and hopes to achieve an increase for Canada too at around $200.
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