A recently released report by Statistics Canada shows that over the last 30 years, the value of imports into Canada has increased fourfold, while duties on those imports have declined from 3.7% in 1988 to 1% in 2017.
In 2017, imports into Canada totalled $561.4 billion, of which $5.7 billion was collected in duty (import duties were $5.6 billion while countervailing and antidumping duties collected were $45 million).
Vehicle imports (personal and commercial use and auto engines and parts) garnered the highest value of duties in 2017 totalling $951 million. Following vehicle imports were clothing and footwear. Together, these goods accounted for half of the total value of all duties collected.
While almost half of the vehicles imported into Canada were from the U.S., almost 70% of duties collected were on Japanese and German vehicles.
U.S. and duty costs
In 1988, Canada collected $2.2 billion in duties on imports from the United States, which was 2.6% of the import value. By 2017, the value of duties declined to $562 million or 0.2% of the import value even though Canada’s imports from the United States more than tripled.
In 2018, retaliatory surtaxes were leveled against American goods (steel, aluminium, condiments, sauces, appliances, and lawnmowers etc.) in response to the U.S.’ 25% tariff on Canadian steel and aluminium.
From January to June 2018, Canada collected $270 million in duty on American goods. In comparison, from January to May 2018 the U.S. collected a total of $239 million in duty from Canada.
China and duty costs
In 2017, Canada’s largest trading partner was the U.S. followed by China. While the U.S. was the largest exporter of goods into Canada, it was China that paid more duties on its goods than America.
Imports from China have been growing steadily over the last 30 years from 0.7% in 1988 to 12.6% in 2017. While the value of goods increased over that time span, the amount of duty dropped from 12.6% in 1988 to 3.3% in 2017, meaning Canada imported $70.9 billion worth of goods from China, but only collected $2.3 billion in duty.
The highest duties were placed on clothing, furniture, footwear, and textiles.
Consequences of a trade war
The consequences of a trade war between Canada and the U.S. can have a severe impact on businesses and residents alike.
The Business Insider claims since the U.S. imposed a 21% tariff on Canadian lumber imports last November, lumber prices have increased by 27%. The national Association of Home Builders estimates the tariffs will result in about 9,400 lost construction jobs with the average single-family home increasing in price by $6,388.
The Retail Council of Canada estimates that for every 1% increase in tariffs on U.S. imports, there is a $1 billion increase on the cost of goods in Canada.