Customs Brokers on Either Side of Canada Border Say Trade Tensions Troubling

A Canadian customs broker told a group of her colleagues from the U.S. that the last year "has been probably the most challenging year of my life." Kim Campbell, who is president of MKMarin Trade Services, fears it could get worse. If the Trump administration decides to levy tariffs on Canadian cars, car parts or uranium under Section 232, the amount of goods that now cross the border tariff-free would drop dramatically, she believes, because Canada would have to put in place counter-tariffs.

Campbell reminded the audience that Canada's retaliatory tariffs because of U.S. Section 232 tariffs on steel and aluminum aren't targeting just metals. She said there are also tariffs on strawberry jam, licorice and ketchup -- all because U.S. firms closed factories that once made those products in Canada. "Canada had really lobbied to keep them," she said.

Amy Magnus, president of the National Customs Brokers & Forwarders Association of America, was moderating the panel at which Campbell spoke Sept. 24 at the NCBFAA Government Affairs Conference in Washington, but she couldn't resist sharing her own U.S.-Canada trade perspective.

Magnus said she lives one mile from the Canada border, and her company, A.N. Deringer, handles a lot of steel. Before the Section 232 tariffs, steel that was milled in the U.S. could go to Canada for further processing and come back with no duties. She said she had to tell her employees to be careful about entering this steel under Chapter 98, which covers a return of U.S. goods, because the processing would be considered by CBP as substantial enough to change a certificate of origin. "Steel does not go on a joyride," she tells them.

Both Magnus and Campbell said they have not seen much of a drop in trade volumes across the border, despite the tariffs. But Magnus said it has motivated her firm to ask Canadian exporters to pay duties to CBP themselves. The problem is, unless their bank has a U.S. presence, they cannot make electronic transfers of funds to the agency. Her firm did not want to be responsible for paying steel tariffs, which can be as high as $70,000 for one truckload, she said.

Campbell also talked about NAFTA, and why Canada has not conceded on some of the last issues -- dairy, de minimis and Chapter 19. She said it's hypocritical that U.S. negotiators complain about dairy price supports, because the U.S. provides subsidies to farmers. She said the Section 232 actions make Canada feel there's more need for impartial review of trade remedies. "If that's not there, there could be these big arbitrary moves again," she said.

She said her firm expects Canada will agree to a de minimis level between $100 and $200, though she didn't specify whether that's Canadian dollars or U.S. dollars. She said the tricky aspect of that change is that Canadian consumers pay a value-added tax, and if exporters sending goods to consumers under de minimis don't charge that tax, they'll have an unfair advantage -- and the government will be starved of revenue.

Campbell said the Trump administration's approach to Canada has led to some Canadian consumers changing their purchasing decisions. Instead of a winter trip to Florida, Arizona or Palm Springs, Canadians are thinking about the Bahamas. And, she said, "Everyone in my family has stopped buying California wine."