Businesses on both sides of the Canadian and U.S. border are facing challenges beyond tariffs. The burden of meeting new compliance regulations and navigating a confused bureaucracy is consuming time and money, putting a strain on businesses already struggling. The Canadian government emphasizes that the country has secured significant exemptions from U.S. tariffs for the majority of products, with Prime Minister Mark Carney highlighting that 85% of trade with the U.S. is tariff-free, boasting the lowest tariff rate globally.
However, for Patrick Fulop, owner of Quebec-based Grappling Smarty, complying with the Canada-U.S.-Mexico Agreement (CUSMA) has been a complicated ordeal. Fulop’s company specializes in selling grappling dummies primarily to U.S. customers, with 75% of sales directed south of the border. The unpredictability of tariff applications has hit Fulop hard, with invoices from U.S. Customs and Border Protection showcasing varying charges for the same product, leaving him puzzled and frustrated.
The complexity of the tariff system has left businesses like Fulop’s in a muddle, with uncertainties surrounding proper tariff rates and country of origin duties. Scott Lincicome from the Cato Institute points out the layers of bureaucracy that have engulfed the once straightforward tariff process, attributing the confusion to the multitude of tariffs imposed under different categories and rates by the Trump administration.
The responsibility of ensuring correct tariff payments falls on U.S. shipping companies, which sometimes opt for charging maximum rates, leaving exporters to navigate potential refunds. Trade lawyer Mark Warner cautions about the risks of non-compliance, emphasizing the severe penalties associated with shipping products that do not meet CUSMA standards.
Fulop finds himself grappling with escalating tariff costs, leading him to increase prices for future orders and explore alternative markets. Despite efforts to comply with CUSMA regulations, Fulop expresses disappointment in the current state of affairs, where uncertainty looms large, hindering smooth trade operations.