WASHINGTON - Janet Napolitano, the Obama administration's homeland security chief, warned Tuesday that the looming array of U.S. spending cuts known as sequestration will cause pain for Canadians, in particular at the busy Canada-U.S. border.

"Sequester will be felt up there because there's only a few big crossing places for trade on the Canadian-U.S. border and they're really important crossing places," she said at the Brookings Institution think tank.

"In fact, trade-wise, they're probably the No. 1 or 2 crossing places in the world. As sequester evolves and we have to furlough people who are port officers, and not fill vacant positions, and not pay overtime, we're unfortunately going to see those lines really stretch."

The equivalent of 5,000 border patrol agent positions will be cut if Congress fails to reach a deal to avert sequestration, Napolitano noted.

“It means less overtime and the ability to hire port officers, so longer lines there. It means really the same at the TSA (Transportation Security Administration). So longer lines there,” said Napolitano, who buried her head in her hands when asked about the impact of sequestration on her growing department.

With the clock is ticking on sequestration, set to kick in Friday with $85 billion in immediate reductions for this fiscal year, federal departments and agencies are in the process of implementing their budget-slashing plans.

The Pentagon alone has been forced to impose $55 billion in cuts this fiscal year, and plans to require up to 800,000 civilian employees to take unpaid time off.

In addition to the 5,000 border patrol agents, the U.S. Customs and Border Protection is preparing to reduce its work hours by the equivalent of 2,750 inspectors as well, meaning cargo inspections at the border could drag on interminably for Canadian exporters.

Obama administration officials have warned of serious delays for air travellers, too, as a host of control towers and airports are shuttered, creating a ripple effect across North America.

President Barack Obama is travelling the country to warn of the repercussions if Congress doesn't reach a deal to put the brakes to sequestration; his cabinet secretaries are making the rounds making similar arguments.

But there appears to be faint hope that any deal will be struck by Friday. Republicans have said they refuse to make concessions to Democrats on raising revenues or closing tax loopholes, and seem poised to allow the country to topple over the latest fiscal cliff to loom on the horizon for Americans.

Obama assailed Congress on Tuesday for its failure to act. In a speech to workers at a ship-building factory in Virginia, he called sequestration "a dumb way of doing things" that threatens to stifle the fragile U.S. economic recovery and erode the country's military preparedness.

"The longer these cuts are in place, the greater the damage," he said, calling on Republicans to work with him on a compromise.

The president was slated to meet with two top Republican senators, John McCain and Lindsey Graham, later in the day, ostensibly about immigration reform. But the White House said sequestration would also be a key topic of discussion.

Graham ruffled the feathers of his fellow Republicans earlier this week when he said he'd be willing to consider $600 billion in new revenue increases as part of a deal to stop the sequester.

Already the impact of sequestration was being felt in the United States. The country's Immigration and Customs Enforcement — an agency that's part of Napolitano's department — announced Tuesday it had released hundreds of detained illegal immigrants who were being held pending deportation in order to cut costs.

While their cases work their way through the courts, the detainees — freed over the past few days — will be under court supervision.

They were released “in order to make the best use of our limited detention resources in the current fiscal climate and to manage our detention population under current congressionally mandated levels,” Gillian M. Christensen, an agency spokeswoman, said in a statement.

At the Brookings event marking the 10th anniversary of the Department of Homeland Security, Napolitano chided lawmakers for demanding her department commit more resources to border security and other public safety measures while failing to do anything to avoid the sequester.

"Trying to do both at the same time is really an impossible task," she said.

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  • The Rules Have Changed

    The biggest change to cross-border shopping is the increased allowances to duty-free purchases. Canadian travellers outside the country for more than 24 hours can now bring in up to $200 in goods. The previous limit was capped at $50. <a href="http://www.flickr.com/photos/blmurch/" target="_hplink">Photo courtesy of: Flickr/ blmurch </a>

  • The Rules Have Changed: Part II

    As of June 1, Canadians who find themselves outside of the border for 48 hours or longer will have their allowance double from $400 to $800. The limit for travellers outside of the country for more than seven days has also changed. <a href="http://www.cbsa-asfc.gc.ca/media/facts-faits/106-eng.html" target="_hplink">Their limit has increased by $50 from $750 to $800</a>.

  • It's All About Timing

    For those looking to capitalize on the new duty-free rules, here's some advice: plan accordingly as the new rules are still time sensitive. For example, Canadians can't claim duty-free status on any goods if their trip less than 24 hours. Also, the date you left Canada <a href="http://www.taxfreetravel.com/Canada Duty Free Exemptions" target="_hplink">doesn't count towards your trip length</a>, but the day you return can.

  • Personal vs Commercial Use

    The duty-free status still only applies if your purchases are for personal use. That means it can be for your house, a souvenir, or anything else for your own personal enjoyment. However, if it's anything for commercial use, expect to pay full duties. Also, while you can bring back gifts for other people under your duty-free allowance, that allowance can't be shared with other people.

  • The Rules To Alcohol Still Apply

    The rules regarding alcohol purchases outside of Canada still hold true, despite the increased in allowance. For example, you can only claim duty-free status if your trip is 48 hours or longer in length. Also worth noting is that only <strong>one</strong> of the following items can count towards your allowance: 1.14 L (40 oz.) of liquor; OR 1.5 L of wine; OR 24 X 355 ml (12 oz.) containers of beer.

  • Exemptions Exist

    Shoppers can expect to rake in many goods across the border with Canada's new rules, but certain items are still off limits. For example, certain fruits, meats and vegetables are prohibited from entering Canada as are weapons such as guns, mace, and pepper spray -- something worth noting if you find yourself at the local gun show.

  • The Rules To Tobacco Still Apply

    Much like alcohol, the rules to tobacco are still in effect. Canadians need to be outside of the country for at least 48 hours but can bring in any of the following as part of their duty-free purchase: 200 cigarettes; 50 cigars or cigarillos; 200 tobacco sticks; and 200 g (7 oz.) of manufactured tobacco.

  • Ready Your Receipts

    Now that the purchases have been made, all that's left is to get them back into Canada and that's where receipts come into play. Canadian Border Services Agency workers may ask for proof of any purchase and having them on hand may be the difference maker between a five-minute process and a five-hour delay. Receipts can also help verify how long your trip was based on the date of your purchases.

  • Don't Forget To Pack Your Goods

    Canadians can now make more purchases over the border but they still need to be sure that they can bring everything back. That's because the CBSA still limits the duty-free status to goods on your possession when returning. There is one exception to this rule though: travellers gone longer than seven days can have the duty-free status apply to their <a href="http://www.cbsa-asfc.gc.ca/media/facts-faits/106-eng.html" target="_hplink">goods delivered to them via mail, courier, or by a delivery agency.</a>