New USMCA Trade Deal Will Raise Canada's Duty-Free Limit to $150
By Ambia Staley
October 2, 2018
The new trade agreement between Canada, the United States, and Mexico has been dominating the news lately, but there is one update coming that online shoppers will want to take note of. Under the new trade agreement, Canadians shopping online will see their duty-free limit raised to $150.00 and the new sales tax limit set at $40.00.
Previously, both the duty-free limit and tax limit were set at $20.00, a limit that has remained unchanged since 1985.
What Does This Mean?
In simple terms, this new limit means that Canadians ordering U.S. goods online will not have to pay duties on products costing $150.00 or less. Any items over that threshold will be subject to an average 2% duty.
However, the number that shoppers will want to pay attention to is the tax limit. The new agreement will see the tax limit raised to $40.00, but anything over that limit is still subject to the sales tax of your province.
For example, someone in Ontario who orders a $100.00 item online from the U.S. will not be subject to a minimal duty fee -- approximately $2.00 based on the 2% average (although duty costs can vary by item). However, they will still have to pay the 13% in sales tax charged in their province, or an extra $13.00 on top of their purchase.
Who Does This Apply To?
These new limits will only apply to U.S. goods bought online. If you take a trip across the border, you are still subject to the current exemptions -- $200.00 for a 24 hour trip, or $800.00 for trips over 48 hours.
It's also important to note that the new rules will only apply to packages shipped by private couriers such as FedEx and UPS, and will not apply to packages shipped by Canada Post.
When Will the New Limits Take Effect?
Don't adjust your holiday shopping lists just yet. While the new duty and tax limits have been announced, it could still be a long time before Canadian shoppers can start taking advantage of it.
The USMCA agreement is now subject to a 60-day review in the U.S. Congress. If all goes well in all three nations, the deal is expected to be signed at the end of November. After that, the Canadian government will need to introduce legislation so that the deal can be ratified and implemented, which could take months. Basically, if there are no delays, Canadians may see these new rules implemented before the parliamentary session ends in June 2019. If it gets delayed, USMCA could become an issue for the 2019 federal election and be delayed even longer.