Donald Trump delivered a speech to the National Federation of Independent Businesses yesterday (June 19) that included a claim which left many listeners confused.
His remarks centered on the importance of small businesses, and covered one of his favorite bugbears, NAFTA. Apparently as an example of how the US is “treated horribly” under the deal, Trump digressed into this anecdote:
There was a story two days ago, in a major newspaper, talking about people living in Canada, coming into the United States, and smuggling things back into Canada because the tariffs are so massive. The tariffs to get common items back into Canada are so high that they have to smuggle them in. They buy shoes, then they wear them. They scuff them up. They make them sound old or look old.
No, we’re treated horribly. Dairy. Dairy. Two-hundred and seventy-five percent tariff. So basically that’s a barrier without saying it’s a barrier.
Trump’s comment, which appeared to refer to this story from the New York Post, seemed to suggest that Canada is putting high tariffs on shoes made in the US, much like the tariffs Canada puts on dairy products to protect its own industry. To avoid the high markups, Canadians are traveling to the US, buying shoes, scuffing them to evade paying duties on their new purchase at the border, and smuggling them into the country.
It’s a “time-honoured Canadian pastime,” as the Toronto Star’s Washington correspondent Daniel Dale put it, for Canadians to shop in the US and sneak a couple items past customs. But Trump’s comments included some fundamental misunderstandings that led many journalists to take to Twitter to express their bewilderment. They even inspired a Twitter Moment.
For one thing, the US makes almost no shoes at this stage, despite the very high tariffs it places on footwear. More than 98% of footwear sold in the US is made elsewhere, mostly in Asia. To add to the confusion, Canadians coming into the US and shopping at American businesses is good for the US.
I'm scratching my head — isn't the smuggling part our problem? The cross-border shopping is great for the US, non?
— Jennifer Ditchburn (@jenditchburn) June 19, 2018
In other words: in this shoe example, Canadians are spending money at US businesses to buy Asian-made goods. Yay America. Then they're – sometimes – hiding these products from Canadian customs to avoid Canadian tariffs on Asian goods. Why is this bad for America? Who knows.
— Daniel Dale (@ddale8) June 19, 2018
The US footwear industry’s business and trade association, Footwear Distributors and Retailers of America (FDRA), issued a blunt reply in response to the comments. “The President seems misinformed about footwear trade,” said Matt Priest, president and CEO of the FDRA. “NAFTA is not treating footwear consumers in America unfairly, the American government itself has not lowered footwear duties in a meaningful way in over 80 years.”
Priest also stated: “On behalf of the American footwear industry, we welcome anyone from anywhere to come and purchase shoes in America. It helps both our brands and retailers grow. Period.”