Canada NAFTA Deal: What Does It Mean For Online Shoppers?
What does the Canada NAFTA deal mean for online shoppers? If approved, shoppers could have duty-free international shopping up to $150.
After over a year of deliberations, a replacement for the North American Free Trade Agreement (NAFTA) has been agreed. The United States-Mexico-Canada Agreement (USMCA) raises the minimum cross-border purchase price for duties and taxes, known as the de minimis threshold, to $150, a large increase from the current de minimis of $20. While the threshold will be raise to $40 domestically, under the new agreement cross-border deliveries will need to exceed $150 before duties and taxes are applied.
This is also good news for international retailers, as cross-border shipments to Canada up to $150 will be processed quicker as they will require less customs paperwork, in turn making customers happier and more likely to re-purchase. The increased threshold may also encourage more cross-border spending from Canadian shoppers as the current de minimis could be to blame for poor checkout conversion.
However, the new agreement may not take effect in time for the busy holiday shopping period in November as it needs to be reviewed by U.S. Congress for 60 days. According to Global News Canada, White House officials said U.S. President Donald Trump, Prime Minister Justin Trudeau and outgoing Mexican President Enrique Peña Nieto will sign the deal at the end of November. Signing also does not mean the deal is ratified, as the legislatures of each member country needs to approve the agreement – which could take months.
Retailers should keep up-to-date with the latest news on the agreement and be prepared to amend duty and tax calculations for Canada in the future.