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Canada Needs to Reconsider Tariffs, Canadian Senators Say

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The Canadian Press reports that a federal Senate committee has called for the Canadian government to "launch a comprehensive review of its tariff policy" with an eye to reducing "the yawning gap" between retail prices in Canada vs. the U.S.

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The tariff system between the two countries was created to help protect Canadian manufacturers, but a wide range of issues – monetary policy, shifting trade partners, the economy and more – have often resulted in huge price differentials, “leading tens of thousands of Canadians to cross the border to stock up on clothes, alcohol, food, books, household supplies and even car tires,” the story reported.

In some cases, the price differences are absurd: Cited was a Lexus assembled in Cambridge, Ont., that sells for $44,950 in Canada vs. $40,950 in the U.S.; a Toyota made in Woodstock, Ont., costs more in Ontario than in Honolulu; books are “routinely cheaper” in the U.S. by as much as 40%.

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The current tariff schedule even calls for an 18% tariff on hockey pants imported from outside of Canada, even though no hockey pants are even produced in the country any more.

Tire dealers on both sides of the border have long complained about the price discrepancy and how it negatively impacts business.

At the same time, “90% of goods enter Canada duty-free, meaning even if all tariffs are eliminated, prices would drop on only a minority of goods.”

“We’re not saying get rid of all tariffs, we’re saying study this and determine if they are appropriate and in most cases they are not,” said Joseph Day, the chairman of the committee.

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“Canadian consumers are feeling ripped off,” said Senator Larry Smith in the story. “When the Canadian dollar is at parity with the U.S., Canadian consumers notice that prices here are typically higher.”

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