Tariffs and the high cost of running shoes

It’s no secret that running shoes are cheaper in the United States than in Canada, but a bit of light as to why came out today in, of all things, a business story on tariffs. CBC News published an analysis of how a 2013 decision to raise tariffs coming into effect January 1st, 2015 could cause a price increase in everything from toothbrushes to bikes.

That particular budget decision covers tariff on items from 72 countries, including China, Mexico and Indonesia. Clearly, the intent is to protect Canada from a flood of cheap imports, but CBC suggested consumers will cover the cost of the tariffs rather than manufacturers or retailers.

It appears this most recent round of tariffs came out of an examination over the Canada-U.S. price gap at a time when the Canadian dollar was close to or on par with American currency.

Mike Moffatt, an economist and assistant professor at Western University’s Ivey Business School in London, Ontario, told CBC the factors that cause Canadians to pay more than Americans are tariffs, energy costs, taxes, payroll taxes and minimum wages.

Moffatt opined that reversing the scheduled tariff costs for January 1st would be one way the federal government could lower prices. Furthermore, he suggested that the government could reduce tariffs all around.

So what’s this got to do with the cost of running shoes?

Moffatt singled out running shoes as one of the high tariffs currently in place at close to 20 per cent. “There are still very high tariffs on running shoes,” he told the CBC.

So what, you shrug. That’s the cost of doing business globally. Well, it doesn’t have to be that way.

That 20 per cent tariff on running shoes has a large ripple effect. When Canadian runners attend marathons in the United States, they invariably come home with two or three pairs of shoes from the marathon expo or U.S. stores. Why? Because they’re cheaper.

Or, alternatively, they look to the Internet for their shoe purchases.

The immediate impact of that is felt locally. In Halifax, for example, those shoe purchases which seem like such great bargains because they circumvent the Canadian tariff conceivably take business away from a local retailer such as Aerobics First.

Secondly, those same tariffs may discourage some parents from picking up running shoes for themselves or their families. They simply might not have the discretionary income. At a time when obesity has turned into a major health crisis, anything that can be done to promote physical activity should be encouraged. If that means eliminating a tariff that is a financial barrier to many individuals, then so be it.

Thirdly, those tariffs are offloaded on you, the consumer. That supposedly protectionist policy discourages consumer spending and promotes an inflationary environment that could undermine consumer confidence and spark fears of a recession.

Moffatt says the political will is lacking to reduce tariffs because it provides a source of revenue for the government. Canada’s industry minister, James Moore, countered and said that the government has to react to world markets and pressures.

Perhaps a better way to do that might be to forego the relatively small revenue from tariffs (CBC pegged the new tariff to be worth $300 to $350-million to the government) and concentrate on bolstering Canada’s economy to withstand some of the pressure from the world’s markets.

Is $350-million in revenue worth gutting local retailers and bogging down Canadians with less spending power? I would suggest not. Eliminating the unnecessary tariffs on items like running shoes and clothing would go a long way to instilling greater confidence in the Canadian economy.

Advertisements

About subthree

A multiple award-winning journalist, I'm currently a contributing editor with both Canadian Running and Canadian Cycling magazines. My articles have appeared in Explore, Canadian Geographic, enRoute, The National Post, The Globe and Mail, and many other magazines and newspapers. Formerly a competitive cross-country mountain biker, I switched to running in 2006. I've run seven marathons, qualifying for Boston five times (and which I've run once). Generally, I've placed or won in my age group in races, in distances ranging from five and 10 kms to half and full marathons. I've also taught spin classes at a number of leading Eastern Canadian gyms. Sub-three was a 2012 #Runchat finalist for Best Overall Blog.
This entry was posted in Uncategorized and tagged , , . Bookmark the permalink.

3 Responses to Tariffs and the high cost of running shoes

  1. omnirunner says:

    Are they protecting Canadian running shoe makers? Can you import US made running shoes w/ out the tarrif?

    • subthree says:

      The only Canadian running shoe manufacturer that I’m aware of is Inov8 in British Columbia. They specialize in trail shoes and have a small line of road shoes. The federal government isn’t likely even aware of their existence. The tariff applies to running shoes coming in from out of country, whether they’re from the U.S. or another destination. It’s a tax grab, plain and simple. Thanks for reading!

  2. omnirunner says:

    So much for NAFTA. In the old days governments funded themselves almost entirely on tariffs.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s