During a characteristically rambling address before the National Federation of Independent Businesses on Tuesday, Donald Trump darted off into an odd tangent in which he suggested that Canadians were smuggling shoes across the U.S. border in order to avoid their country’s high tariffs.
There was a story two days ago in a major newspaper talking about people living in Canada coming into the United States and smuggling things back into Canada because the tariffs are so massive. The tariffs to get common items back into Canada are so high that they have to smuggle ‘em in. They buy shoes, then they wear ‘em. They scuff ‘em up. They make ‘em sound old or look old. No, we’re treated horribly.
Inquiring minds wondered: What the hell was our president talking about? Trump was almost certainly referring to an article recently published in the New York Post in which Isabel Vincent, a Canadian expat living in New York, wrote about the tradition of Canadians traveling across the border to shop. But Trump seems to have conflated anecdotes about shoes and outdoor equipment, thus synthesizing the bizarre image of frugal Ontarians scuffing their new Nikes to save a few bucks on customs duties.
A Canadian who once lived in Vancouver told me he would cross the border into Seattle to buy outdoor equipment that he simply couldn’t find in Canada.
“Before we crossed back into Canada, we’d remove the price tags and make sure that the new equipment looked as dusty as possible,” he said.
A Toronto-based designer I know purchased two pairs of shoes (retail $800 each) online from a midtown department store and shipped them to my office. The Italian contraband sat under my desk for weeks until I could entrust them to a carrier who would be crossing the border. I finally convinced my nephew who had been visiting New York to stuff them into his back-pack and rendezvous with the designer in Toronto for the drop-off. My friend saved $159.59 in combined federal and provincial taxes, and $187.26 in estimated customs charges.
You may have noticed that the shoes in this anecdote were not actually made in America. Rather, they were Italian. This is actually a rather important detail, which undermines Trump’s talking point. Also undermining his argument that Canadians have to do weird things to get around their country’s horrible tariffs: The North American Free Trade Agreement phased out tariffs on textiles and footwear manufactured in the United States, Canada, and Mexico. Canadians can buy a pair of made-in-the-USA New Balance kicks and carry them across the border duty free without smearing mud on them first. Canadians can also bring home, duty-free, up to CA$800 worth of merchandise made outside of North America but sold in the U.S. (like fine Italian loafers), as long as they spend at least 48 hours in the U.S.
Bob Kirke, executive director of the Canadian Apparel Federation, told me that historically, Canadians have shopped across the border not because they want to save on border taxes, but just because the bigger, more competitive market in the U.S. sometimes makes clothing and shoes a bit cheaper. “There are some differences in retail prices that cause people to walk over to the United States and buy shoes over there,” he told me. When it comes to tariffs on footwear, Canadian shoppers could soon have an advantage over Americans, he pointed out. Thanks to its recent free trade agreement with Europe, and the Trans Pacific Partnership (which the remaining countries chose to sign after the U.S. pulled out), tariffs on luxury footwear from Italy and Portugal and sneakers from Vietnam are about to drop or disappear. “Historically, our duties have been similar to the U.S., but we’re moving ahead and eliminating duties on all these products,” Kirke said.
But to get back to the main point, none of this is actually evidence that Canada treats the U.S. “horribly” on trade. In fact, it suggests our neighbor treats us better than most. Other than its tariffs on dairy, there aren’t many examples of flagrant Canadian protectionism that puts the U.S. at a serious disadvantage. And so, in order to justify his recent crusade against Ottawa, Trump is stuck making up nonsense about shoe smugglers.
One more thing
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