The word "tariff" written on a chalkboard beside an American flag

Trump's NAFTA demands include raising Canada's online duty de minimis threshold

One of the most noteworthy demands on a list of NAFTA renegotiation priorities released by the Trump administration yesterday was a call for Canada to raise its de minimis online duty threshold from $20 to $800.

Trump, who has pulled no punches in sharing his thoughts on NAFTA, is banking on the fact that this increase to the online duty threshold—which would make Canada's de minimis amount dead even with the United States'—would prove to be highly advantageous for American businesses. Theoretically, an $800 de minimis threshold would incentivize Canadians to shop online more often with US retailers and eliminate the Canadian protectionism that currently exists in that regard.

In Canada, there is a very mixed opinion on the issue. Some believe that the loss of tax revenue would be highly unfair to Canadians.

"Why shold goods from one source be tax free when the ones from another source are taxable?" said Karl Littler, VP public affairs at the Retail Council of Canada. "We're not pushing to push it down. Our point is that it shouldn't be raised at all and the fundamental point is tax fairness and not cutting your own throat economically."

Yet others believe that it could be a blessing in disguise, or even a long overdue change.

Citing data from a C.D. Howe report, eBay Canada managing director Andrea Stairs notes that "it currently costs the federal government close to $170-million to collect roughly $40-million in duties and taxes (including provincial taxes) for shipments valued between $20 and $80. Plainly stated, Canada's de minimis threshold is a money losing endeavour for taxpayers."

It will be some time before Canadians and Americans know whether this particular NAFTA demand will go through in negotiations. Talks can only begin on August 16 at the earliest. The Canadian government will reportedly not be releasing a similar list of goals and priorities for negotiation before that date.