Why Online Shopping in Canada Is So Expensive

Welcome to Canada, where everything costs 15-25% more expensive than same product south of the border in the US.

Most of things you want to buy in Canada will most likely cost much less in the US. Why not shop in the US and get it shipped to Canada you say? Well, that is because Government of Canada will hit you with a big duty fee that will be anywhere between 10%-50% of the item value when you cross the border with it.

ParentRap / Pixabay

Why Canadians Pay More For Online Shopping

What happens when you order online from the US and ship it to Canada - your order will fall under the provision of the Postal Imports Remission Order of Canada: if someone mails you an item worth CAN$20 or more, there is duty or tax payable.

Example - buying stroller for your little one:

putevodnik / Pixabay

USA - $599 USD + no tax: because your are shipping to Canada: https://www.buybuybaby.com/store/product/britax-reg-b-free-travel-system/3343161

Canada - $799 Canadian plus 14% provincial tax: https://well.ca/products/britax-b-free-travel-system_141411.html

So if you want to buy that $600 USD stroller in the US (manufactured in China) vs buying it in Canada for $900 plus HST or PST/GST (about 14%), you think you are saving $737 Canadian vs $1,026 Canadian for a total savings of almost $300 - not bad for a quick research.

BUT not so fast: the problem is that now Government of Canada will ask you to pay the applicable duty, the GST or HST, and any PST on the item's full value duty, which you can calculate yourself here https://www.cbsa-asfc.gc.ca/travel-voyage/dte-acl/est-cal-eng.html. This will amount to about $200 if you import into Quebec or Ontario. So you are still saving about $100 but not as much as $300.

Difference between Canada and the US

The difference is that when you ship anything to the US instead of $20 exemption like in Canada they have $800 US exemption. With the new NAFTA review, the US government is pushing Canada to up and match the exemption.

Why Canada Does Not Want to Match US $800 exemption?

You would think that this would be a good thing for everyone if Canada upped the exemption. However accounting firm PwC – commissioned by the Retail Council of Canada released a report saying that 300,000 jobs will be lost because Canadians will be paying 20-30% less and that usually goes to retail people's salary. Even if exemption limit is pushed only to $200 - the study says still 280,000 people would lose their jobs in Canada.

Canada Retail is furious that hard working Canadians trying to save a buck or $300 if you are buying above mentioned stroller and say that it is ridiculous that you want to save money:

"It would be a bizarre public-policy choice to incentivize people to shop anywhere but here," said Karl Littler, the Retail Council of Canada's vice-president of public affairs. "This would be an incentive not to invest here. It would, in fact, be an incentive to invest elsewhere in order to gain access to the tax and duty advantage."

Why US wants Canada to match it?

GDJ / Pixabay

US does not agree. Mr. Lighthizer, the U.S. Trade Representative, is pushing $800 exemption, because he says its unfair to Canadians and Americans. He says that NAFTA might get cancelled if this point is not dealt with.

The American side says that they will reduce wait times, and increase revenue for the American government and companies in the US.

"The facts are that the government spends more to go after de minimis than they collect," said Maryscott Greenwood, chief executive of the Canadian American Business Council, who added that a higher threshold would benefit Canadian exporters and consumers.

"The public wants to be able to buy things for convenience online," she said.

What can you do to help to raise the exemption?

There are few petitions going on, you can sign it if you wish:

https://petitions.ourcommons.ca/en/Petition/Details?Petition=e-399

https://www.change.org/p/raise-the-customs-exemption-limit-for-purchases-coming-into-canada

Under the Postal Imports Remission Order, goods imported from another country are exempt from taxes and duties if the value does not exceed $20; $60 on gifts. That's right, for an item worth more than $60, you have to pay to receive a gift. This is known as the de minimis threshold. (de minimis: too trivial or minor to merit consideration, especially pertaining to law) This threshold was put in place in 1985, long before the emergence of e-commerce, which many of us use today. This regulation is completely outdated and out of step with our NAFTA peers, and this limit of $20 is one of the lowest in the developed world.

Canada is a part of NAFTA (North America Free Trade Agreement) along with the United States and Mexico. The U.S. has a de minimis threshold of $800USD, and Mexico a threshold of $300USD.

There are many, many items that simply cannot be purchased within Canada. When importing, with duty and taxes as well as brokerage fees that may occur, you may end up paying much more than (sometimes even double) the actual price of an item. This doesn't just harm consumers, but also small to medium-sized businesses. Commercial goods above $1600 are exempt from duties and taxes, protecting many larger businesses from encountering these harsh fees. It's time to stop penalizing the small guys so heavily for trying to take part in the global economy, or even just the North American economy for that matter, and wasting so much money, time, and manpower doing it.