Canada’s Response to the U.S. Tariffs
UPDATE: March 5th 2025
ADDED: Department of Finance: Notice of Intent to Impose Countermeasures in Response to United States Tariffs on Canadian Goods – Requesting Feedback from Trade
Notice of Intent to Impose Countermeasures in Response to United States Tariffs on Canadian Goods
The Department of Finance has published a Notice of Intent to Impose Countermeasures in Response to United States Tariffs on Canadian Good, and is seeking industry feedback by March 25th 2025. To review the complete document and the proposed goods targeted in the countermeasure, please click on the following link:
Notice of Intent to Impose Countermeasures in Response to United States Tariffs on Canadian Goods
Issue
The U.S. announced 10% tariffs on Canadian energy imports and 25% on all other Canadian imports, effective March 4, 2025.
Canada’s Immediate Response
Imposing reciprocal 25% tariffs on C$30 billion of U.S. imports, effective March 4, 2025, at 12:01 am.
Proposed Second Round of Tariffs
- Intent to implement additional tariffs on $125 billion of U.S. imports
- Subject to a 21-day comment period before implementation
Scope of Tariff Measures
- 25% tariff on additional $125 billion worth of U.S. goods if U.S. doesn’t remove its tariffs
- Applies only to goods originating from the U.S.
- Doesn’t apply to U.S. goods in transit when countermeasures come into force
- Remission framework announced to help importers seeking transitional relief
Feedback Process
- Government seeking views on proposed tariff measures until March 25, 2025
- Feedback can be submitted via online form, email, or mail
- Government may respond to additional U.S. tariff threats before the notice period ends
Key Dates
- March 4, 2025: Implementation of initial Canadian tariffs
- March 25, 2025: Deadline for feedback on proposed second round of tariffs
Privacy
Information received throughout this submission process is subject to the Access to Information Act and the Privacy Act and is collected under the authority of the Financial Administration Act. Participation in the consultation is voluntary and will have no impacts on services you receive from the Government of Canada.
The government is seeking views from business, stakeholders, and all Canadians regarding the impacts of the application of tariffs to the goods listed in Table 1 as well as complementary response measures, in response to the U.S. tariffs.
In order to respect privacy and confidentiality, when providing your submission please advise whether you:
- Consent to the disclosure of your submission in whole or in part;
- Request that your identity and any personal identifiers be removed prior to publication; and,
- Wish any portions of your submission to be kept confidential (if so, clearly identify the confidential portions)
Original Post
In response to the U.S. tariffs which went into effect on March 4th 2025, Canada has published the following:
Customs Notice 25-10: United States Surtax Order (2025-1)
United States Surtax Order (2025-1)
This notice provides information on the application of the United States Surtax Order (2025-1), specifically regarding surtax provisions effective March 4, 2025, on certain goods originating in the United States (U.S.).
The surtax is introduced by Canada in response to the U.S.’ imposition of tariffs on goods imported into the U.S. from Canada.
The administration of the United States Surtax Order (2025-1) is the responsibility of the Canada Border Services Agency (CBSA).
Application
Effective March 4, 2025, certain goods imported into Canada and originating in the U.S. are subject to a surtax in the amount of 25% of the value for duty in accordance with the United States Surtax Order (2025-1).
The Schedule to the United States Surtax Order (2025-1) contains a complete list of goods subject to the surtax.
The surtax:
- Will only apply to goods that originate in the U.S., which shall be considered as those goods eligible to be marked as goods of the U.S. in accordance with the Determination of Country of Origin for the Purpose of Marking Goods (CUSMA Countries) Regulations
- Will apply to goods imported for commercial and personal purposes, even when exported from a country other than the U.S. into Canada
- Applies to goods imported from the U.S., including those that may be eligible for the remission of customs duties, sales and/or excise taxes under the Postal Imports Remission Order or the Courier Imports Remission Order
- Does not apply to goods that are classified, or that should be classified, in Chapter 98 of the Schedule to the Customs Tariff, other than goods of 9804.30, 98.25, 98.26, 9897.00.00, 9898.00.00 and 9899.00.00
- Does not apply to goods that may be classified in the tariff items of Chapter 99 of the Schedule to Canada’s Customs Tariff – with the exception of goods classified in tariff items 9966.00.00, 9971.00.00 and 9989.00.00. Goods in those tariff items are subject to the surtax even though they are entitled to the Most-Favoured-Nation zero customs duty rate under that Chapter
- Does not apply to goods (both casual and commercial) eligible for remission under the Akwesasne Residents Remission Order
Duties Relief and Duty Drawback Programs
Canada’s Duties Relief and Duty Drawback Programs will be available for surtax paid or payable, subject to the provisions of the Canada-United States-Mexico Agreement (CUSMA).
Proof of Origin
Pursuant to subsection 35.1(1) of the Customs Act, proof of origin must be furnished for all imported goods subject to exceptions set out in the Proof of Origin of Imported Goods Regulations and Customs Notice 20-22: The Canada-United States-Mexico Agreement’s (CUSMA) Regulatory Amendments and New Regulations Made Pursuant to the Customs Act.
For commercial goods, proof of origin may be in the form of a commercial invoice or any other documentation that contains the minimum data elements as set out in Annex 5-A (Minimum Data Elements) of CUSMA and replicated in Appendix H of Memorandum D11-4-2: Proof of Origin of Imported Goods.
Personal importations of goods, also known as casual goods (meaning goods that are imported into Canada other than commercial goods) are considered to originate in the U.S. when the goods are marked as a good of the U.S., or the goods have no country of origin marking and there is no evidence that the goods are the product of a country other than the U.S. Casual goods imported from a country other than the U.S. that are marked as made in, produced in or originating in the U.S. are considered to originate in the U.S.
Calculation of Surtax when Accounting for Commercial Importations
The amount of surtax payable is calculated in the amount of 25% of the value for duty of the imported good in accordance with the United States Surtax Order (2025-1). This is in addition to any other duties owing (e.g., in addition to anti-dumping duties that may be applicable).
Chart 1: Calculation of Surtax Examples
Revision Date: March 4th 2025
| Example | Surtax Calculation |
1. The value for duty (VFD) of an imported good subject to a surtax is $150 The imported good has a Most Favoured Nation (MFN) duty rate of 0%. The applicable surtax is 25%, as per the Schedule to the United States Surtax Order (2025-1) | The amount of surtax is calculated as follows: $150 (VFD) x 0.25 (% surtax) = $37.50 (surtax payable) Customs duties and taxes are to be calculated as follows: $150 (VFD) x 0 (% MFN duty) = $0 (customs duty) $150 (VFD) + $37.50 (surtax payable) + $0 (customs duty) = $187.50 (value for tax) = $187.50 x 0.05 (% GST) = $9.38 (GST) Total of surtax, customs duty, and GST payable is $37.50 + $9.38 = $46.88 |
| 2. The value for duty (VFD) of an imported good subject to a surtax is $150 The imported good has a Most Favoured Nation (MFN) duty rate of 5% and is subject to anti-dumping duties of $34. The applicable surtax is 25%, as per the Schedule to the United States Surtax Order (2025-1) | The amount of surtax is calculated as follows: $150 (VFD) x 0.25 (% surtax) = $37.50 (surtax payable) Customs duties and taxes are to be calculated as follows: $150 (VFD) x 0.05 (% MFN duty) = $7.50 (customs duty) $150 (VFD) + $37.50 (surtax payable) + $7.50 (customs duty) + $34.00 (anti-dumping duties) = $229.00 (value for tax) $229.00 x 0.05 (% GST) = $11.45 (GST) Total of surtax, customs duty, anti-dumping duty, and GST payable is: $37.50 + $34.00 + $7.50 + $11.45 = $90.45 |
Exceptions to Surtax
In-Transit Goods
The surtax will not apply to U.S. goods that are in transit to Canada on the day on which the surtax comes into force.
- This includes goods that were in transit before the surtax comes into force
- For the purpose of this Customs Notice, ‘in transit to Canada’ refers to goods bound for but not yet arrived in Canada, and under the control of a carrier
- Importers must have proof in their possession that such goods were in transit to Canada in order to demonstrate that the surtax is not applicable
- Such proof may include the following documentation: shipping documents (for example, a bill of lading), report of entry documents, and cargo control documents
- Such proof may be requested at any time by a CBSA officer
Classification Heading 40.11
The surtax will not apply to goods that are classified under heading 40.11 of the Schedule to the Customs Tariff that are for use as original equipment in the production of any vehicle, machine or appliance referred to under that heading.
This includes Original Equipment Manufacturer (OEM) tires. Aftermarket tires are subject to the surtax under the United States Surtax Order (2025-1).
Returned, Repaired and/or Altered Goods
In the following scenarios, the importation would not be subject to the surtax:
- Returning goods that are made in the U.S. and previously imported into Canada and duty-paid – for example, a Canadian tourist or businessperson is returning from the U.S. with goods (such goods would have previously been released and accounted for under the Customs Act before its sale to the Canadian owner).
- Goods that are made in the U.S. and are repaired or altered across the border – for example, a specialized good in the U.S. might require repair in Canada, or vice versa. Again, if the good were in Canada, it would need to already be duty paid.
Accounting: Surtax Code 25066A
Importers must declare imported goods as subject to a surtax when completing a Commercial Accounting Declaration (CAD) via CARM Client Portal (CCP), Electronic Data Interchange (EDI) or Application Programming Interface (API) and declare the applicable surtax or safeguard code.
The surtax code is 25066A. The amount of surtax owing is entered in field 85 “Surtax” of the CAD. If importers elect to use the self-declare option in CARM, the amount of surtax owing must be calculated by the importer and entered in the Surtax field.
Accounting for surtax under the United States Surtax Order (2025) will follow the instructions outlined in Memorandum D16-1-1: Information pertaining to the application, collection, and adjustment of a surtax.
Commercial goods qualifying for an exception to a surtax must be declared as non-subject to surtax at the time of accounting.
When an amount of surtax is being declared at importation, refer to Memorandum D17-1-10: Coding of Customs Accounting Documents for additional information on completing the CAD. This also applies to goods being released and accounted for in the Courier Low Value Shipment (CLVS) Program.
Goods eligible for the remission of customs duties, sales and excise taxes under the Postal Imports Remission Order or the Courier Imports Remission Order and subject to a surtax must be accounted for.
Casual goods will be accounted for in accordance with Memorandum D17-1-3: Casual Importations.
Corrections, Re-Determinations, and Refunds
Corrections or adjustments to original declarations and requests for re-determinations are to be made in the prescribed form and manner under the relevant provisions of the Customs Act, in accordance with the procedures outlined in:
- Memorandum D11-6-6 : “Reason to Believe” and Self-Adjustments to Declarations of Origin, Tariff Classification
- Value for Duty, Memorandum D6-2-3: Refund of Duties and Memorandum D6-2-6: Refund of Duties and Taxes on Non-commercial Importations
- Note: This includes also includes goods released and accounted for in the CLVS Program.
If surtax was not correctly self-assessed or was self-assessed in error for commercial goods, then an adjustment to the CAD may be submitted via the CCP or via EDI/API. For more information on how to submit an adjustment for commercial goods, refer to Memorandum D17-2-1: Adjusting Commercial Accounting Declarations.
If an adjustment is required for casual goods, including those accounted for on a CAD, a request must be made using a Form B2G, CBSA Informal Adjustment Request. Adjustments for casual goods cannot be submitted through CARM. For more information on casual refunds please refer to Memorandum D6-2-6: Refund of Duties and Taxes on Non-Commercial Importations.
The origin, tariff classification, and value for duty of imported goods may be re-determined or further re-determined in accordance with the Customs Act and the Determination, Re-determination and Further Re-determination of Origin, Tariff Classification and Value for Duty Regulations. This may occur further to a self-adjustment. In so doing, as with customs duties and taxes, the CBSA may consider the applicability of any undeclared amount of surtax.
Examinations and Verifications
Imported goods may be subject to examination at the time of importation and to post-release verification for compliance with the Tariff Classification, Valuation, Origin, and any other applicable provisions administered by the CBSA. In cases of non-compliance, in addition to the imposition of surtax, customs duties and taxes, penalties may be assessed, and interest may accrue on the amount owing.
Advance Rulings for Commercial Importations
For predictability and certainty on how goods are to be accounted for, a binding ruling on the Free Trade Agreement (FTA) Origin, tariff classification, or marking of goods imported from a Canada-United States-Mexico Agreement (CUSMA) country in advance of the importation of goods can be requested under the Customs Act.
Refer to Memorandum D11-4-16: Advance Rulings for Origin Under Free Trade Agreements for additional information. Refer to Memorandum D11-11-3: Advance Rulings for Tariff Classification, for additional information on requesting an advance ruling on the tariff classification of goods.
Recourse
In accordance with the Customs Act, and section 12 of the Customs Tariff Act, those who have received a notice of re-determination or further re-determination under s.59(2) of the Act, may request review under s.60 of the Customs Act within 90 days and after having paid amounts owed.
Refer to Memorandum D11-6-7: Request under Section 60 of the Customs Act for a Re-determination, a further Re-determination or a Review by the President of the Canada Border Services Agency for details.
Order in Council #2025-0265
For the complete list of tariff items subject to the surtax, please click the below link:
Tariff Items — Goods Subject to Surtax
To stay updated on these Tariffs, please feel free to visit our website Blog page,
