Cross-border shoppers hit by new surtax, while interest rates rise


Canadians spend anywhere from $4.7 billion to $8 billion on cross-border shopping, and if you spent either the July or August long weekend looking for bargains in the U.S., you may have had an unpleasant surprise: Despite the loonie holding some ground against U.S. currency, a new 10% surtax on certain consumer goods came into effect on July 1, applied if you exceeded your exemption limit.

A few weeks ago, Canada was hit with steel and aluminum tariffs by the U.S., which led to a $2 billion counter-measure from the Canadian government. This month, the Canada Border Services Agency has confirmed that a surtax will apply on certain goods to Canadian citizens who have exceeded their exemption limits; this charge is above and beyond the standard duties already in place.

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Each year, Canadian residents take an average of 20 million overnight tripsacross the border, and it’s these quick visits that will hit your wallet the hardest. After all, there are no duty exemptions if you’ve stayed in the U.S. for less than 24 hours, so this new surtax will apply to all purchases made on such short trips. Make sure you’re familiar with the exemption limits for U.S. stays between 24 and 48 hours, and over 48 hours, so you know when standard duties and this new surtax apply.

The 10% surtax is being levied by the U.S. government on the value of the applicable duty on any items classified as steel or aluminum products, as well as on a classification referred to as “Other Goods.” This category covers a wide range of things, including coffee, yogurt, candy, household and cleaning products, some types of alcohol, appliances, and electronics. Outdoor enthusiasts will be hit, too: The new surtax applies to various types of pleasure boats, sailboats, sleeping bags, mattresses, and more. Even your playing cards used around the campfire will cost more if they are made in the U.S.! A complete list of applicable items is available on the Department of Finance website.

Meanwhile, there is more bad news for consumers. Even if you’re planning to focus on buying homegrown Canadian products, Canadian interest rates are still on the rise, with the most recent hike announced by the Bank of Canada on July 11. That won’t help the millions of Canadians who hold a share of the $2 trillion in consumer debt.

Courtesy Fundata Canada Inc. © 2018. Evelyn Jacks is president of Knowledge Bureau. This article originally appeared in the Knowledge Bureau Report. Reprinted with permission. All rights reserved.

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