By accident, Trump may lower Canadian prices

Just before the United States coughed up the latest trade demands, President Donald Trump was fuming on TV about “predatory” foreign online retailers who, he further fulminated, are ripping off Americans. That sounded typically goofy, considering Canadians buy quite a lot these days from U.S. online marketers.

But there’s a point buried in all of this. And, as with the dairy dispute, Trump’s pro-America position could benefit Canadian consumers.

Buy an item online from the States, and you’re liable for Canadian customs duty if the price is more than $20, explains trade and investment expert Carlo Dade of the Canada West Foundation.

Mexicans who buy online are dutyexempt up to $300. Americans don’t pay duty until the price of a purchase tops $800.

Canada’s $20 threshold is so low (and so erratically applied) that there’s effectively a risk of duty on almost everything we might buy online from the States.

We Canadians can be very selfrighteous about free trade. But this is the exact opposite. It’s old-school Canadian protectionism.

The Americans have been livid about the online duty disparity for some time, Dade says.

This imbalance not only makes it difficult to buy from the States, but provides no incentive for Canadian online retailers to lower their prices.

Dade knows this personally as well as professionally. He says he paid duty on about $1,000 in specialized hiking gear that isn’t sold in Canada.

Major Canadians retailers have been awful at developing online shops that interest either Canadians or Americans. It’s no wonder; they’re behind a protective wall that makes it harder for American online stores to steal their customers.

The traditional Canadian argument is we’re a smaller economy and need to protect certain economic sectors. But we formally promised to abandon that attitude when NAFTA came into force more than 20 years ago.

Protectionism always brings higher prices. Now Trump wants digital trade to be a specific point of negotiation. He may be doing Canadian consumers a favour.

His administration also made it clear the U.S. is determined to dismantle Canada’s supply management system in dairy, which is not part of the free trade deal now.

Supply management discriminates against U.S. farmers. It also keeps prices unnaturally high for Canadians who buy milk and cheese. And it provides millions in direct subsidies to a relatively small but influential group of Canadian farmers.

Last year, Ottawa wanted to allow more imports of European cheese. To win the gracious consent of farmers, the government paid them direct subsidies of $350 million.

In this trade dispute, Canada doesn’t have a milking-stool leg to stand on. The Americans have free access to the Mexican dairy market and virtually none to ours.

There are alarm bells in the new proposals, particularly the U.S. desire to abolish the mechanism for resolving trade disputes. The Americans have pretty much ignored that anyway in past softwood lumber disputes.

Yet, in general, the proposals appear fairly moderate, to the point that Trump faces U.S. media accusations of backing down.

Dade and other observers feel Trump has come up against a fact of U.S. politics — Congress controls trade. The administration can negotiate and set goals, but Congress can revise them and reject or accept the results of negotiations.

One odd irony is that in areas where Trump does have a valid case, he may end up lowering prices for Canadians.