Among U.S. President Donald Trump’s 16-page list of proposed changes to free trade is one that will hurt Canadian retailers, their employees and many of the firms that rely on them.
Among the amendments the White House wants is an increase in the value of goods that American stores can send to Canadian customers without paying taxes or duties. Instead of $20 Cdn, the limit would rise to $800 US.
It would be good news for Canadian consumers, but bad news for anyone who owns or works in a Canadian store that would suddenly face powerful competition. In these days when online retailers are chipping away at brick-and-mortar stores, it would be another blow among many.
Larry Rosen, CEO of Harry Rosen, told CTV News: “It would be a catastrophe for retail in this country.”
Rosen predicted that if the increase were approved, many businesses, including his, would move warehouses and other parts of their operations to U.S. border cities.
There would be winners, of course, if the proposed change goes through. Consumers wouldn’t have to travel to the U.S. for a week to get the $800 exemption. They could shop for deals without leaving home.
Some Canadian companies would benefit from a higher threshold. For instance, smaller companies that sometimes buy from the U.S. could reduce their costs.
People in remote areas, who are far from discount stores, would find cost savings. Canada Post and other parcel-delivery services would see a jump in business with more orders.
The higher limit might even make the Canadian government some money, because it costs so much to process all those small parcels at the border. One study suggested that keeping the limit at $20 would bring in $39 million more in government revenue than an $80 limit, but it would cost $166 million more to collect that revenue.
For all those winners, however, there are many losers, including more than two million people who work for Canadian retailers. Many of those jobs are low-skilled or entry-level. They give young people a start in the working world and provide incomes for people without additional education.
As automation and computers whittle away at similar jobs in other sectors, the options for new workers and the working poor shrink even more. Raising the threshold is another wound, inflicted by our own government.
“It would literally be an incentive from government for Canadians to shop anywhere but Canada,” said Karl Littler, a spokesman for the Retail Council of Canada.
“Is it reasonable to have two completely different tax and duty regimes — one for those who hire and invest here, which would be more negative than the one for those who are outside shipping in?”
The pain would spread beyond those retailers and their employees. Commercial-building owners could see more of their tenants shutter their operations, hollowing out malls and downtown shopping areas. Businesses that serve retailers and their employees would see revenues drop.
Advertising in local newspapers, magazines, radio stations and TV stations would shrivel even more than it already has.
Consumers might be gleeful at the thought of saving some money on the next purchase, but the glee fades when that discount kills your job or your child’s job.
Many argue that change is inevitable, and it’s foolish to try to hold back the tide of globalization and technological advance. But we also don’t have to accept every piece of collateral damage without trying to mitigate it.
We can manage change, even inevitable change. That includes saying no to saving a few bucks at the cost of someone else’s job.
