By Farhana Uddin
Do you believe that buying “Made in Canada” products allow you to avoid customs duties and reduce your grocery bill? Here’s what you need to know about product labeling.
Trade between Canada and the United States has raised concerns about the price of certain imported goods. Many consumers are therefore looking to save more and try to take a stand by encouraging local brands, producers, and suppliers. However, “Made in Canada” may not mean what you think it means. What about non-Canadian companies that manufacture their products here? How are they affected by customs duties on US goods imported into Canada? Here’s what you need to know about it.
What are products from the United States subject to customs duties?
Recently, the United States announced its intention to impose 25% on steel imports and 10% on aluminum imports. The Government of Canada responded tit for tat by imposing 10% duties on the following products manufactured in the United States: coffee, ketchup, orange juice, yogurt, salad dressing, mayonnaise, chocolate, whiskey, cucumber, licorice, toilet paper, strawberry jam, flavored water, and maple syrup. (Let’s be serious: who would buy maple syrup made in the United States? It’s a uniquely Canadian product!)
Understanding the possible impact of this situation on your daily, weekly, or monthly shopping habits helps you know how customs duties work.
How are customs duties applied?
Custom duties are applied to certain imported goods when crossing the border. They are paid by the manufacturer, who passes on this price increase to consumers in the importing country. These rights depend on where the final product – not its ingredients or components – is made and only apply if the product crosses the Canada-US border. The country of origin of the manufacturer has no bearing on these rights.
Take, for example, a well-known product: orange juice. Since oranges do not grow in Canada, does this mean that Canadians will pay more to obtain American brands of orange juice? Not necessarily. The imposition of customs duties depends on where the product is made, not where the manufacturer is. Thus, there will be no customs duties on Minute Maid orange juice. Why? Because even though this juice is produced by an American company and made from oranges grown in the United States, it is prepared and manufactured in Canada. Therefore, the finished product does not cross the border, and no customs duties apply. On the other hand, the American company Tropicana processes and manufactures its products in the United States. As a result, its orange juice is subject to customs duties when crossing the border, and its selling price in supermarkets will be higher.
Does this mean that all “Made in Canada” products are duty-free? We must first understand what this mention means to answer this question.
