US Imposed Tariffs and Canada’s Response: What you need to know
UPDATED: March 3rd, 2025
ADDED: Amendment to Duties to Address the Flow of Illicit Drugs across our Northern Border
ADDED: CBP CSMS # 64297449 – GUIDANCE: Additional Duties on Imports from Canada
Post Update:
Amendment to Duties to Address the Flow of Illicit Drugs across our Northern Border
This executive order amends a previous order from February 2025 regarding the flow of illicit drugs across the U.S. northern border. To review the Amendment, please click on the following:
Amendment to Duties to Address the Flow of Illicit Drugs across our Northern Border
The key change focuses on duty-free treatment for certain imported articles.
The amendment revises section 2(h) of the original order, allowing duty-free “de minimis” treatment for eligible covered articles described in subsections (a) and (b).
However, this duty-free status can be revoked once the Secretary of Commerce notifies the President that adequate systems are in place to process and collect tariff revenue for these articles. This change has significant implications for trade and customs procedures related to the northern border.
CSMS # 64297449 – GUIDANCE: Additional Duties on Imports from Canada
The following is a summary issued by Customs Border Protection. To review the complete document, please click on the following:
CSMS # 64297449 – GUIDANCE: Additional Duties on Imports from Canada
Application of Additional Duty Rates
Effective on or after 12:01 a.m. eastern standard time on March 4, 2025, with respect to goods that are the product of Canada entered for consumption, or withdrawn from warehouse for consumption, the following HTSUS classifications and additional duty rates apply:
9903.01.10:
- All imports of articles that are products of Canada, other than products classifiable under headings 9903.01.11, 9903.01.12, and 9903.01.13, and other than products for personal use included in accompanied baggage of persons arriving in the United States, will be assessed an additional ad valorem rate of duty of 25%.
9903.01.13:
- Imports of energy or energy resources of Canada, as defined in section 8 of Executive Order 14156 of January 20, 2025 (Declaring a National Energy Emergency) as: crude oil, natural gas, lease condensates, natural gas liquids, refined petroleum products, uranium, coal, biofuels, geothermal heat, the kinetic movement of flowing water, and critical minerals, as defined by 30 U.S.C. 1606 (a)(3) will be assessed an additional ad valorem rate of duty of 10%.
The additional ad valorem duty provided for in new HTSUS headings 9903.01.10 and 9903.01.13 applies:
- In addition to all other applicable duties (including antidumping and countervailing duties), taxes, fees, exactions, and charges
- Products of Canada that are eligible for special tariff treatment under general note 3(c)(i) to the tariff schedule (e.g., the United States-Mexico-Canada Agreement), or that are eligible for temporary duty exemptions or reductions under subchapter II to chapter 99
- To products of Canada include both goods of Canada under the rules of origin set forth in part 102, title 19 of the Code of Federal Regulations, as applicable, as well as goods for which Canada was the last country of substantial transformation prior to importation into the United States
Exclusions
The following HTSUS classifications apply to products that are excluded from the additional ad valorem duties:
- 9903.01.11: Articles the product of Canada that are donations, by persons subject to the jurisdiction of the United States, of articles, such as food, clothing, and medicine, intended to be used to relieve human suffering
- 9903.01.12: Articles the product of Canada that are informational materials, including but not limited to, publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, and news wire feeds
Chapter 98
- The additional duties imposed by headings 9903.01.10 and 9903.01.13 will not apply to goods for which entry is properly claimed under a provision of chapter 98 of the tariff schedule pursuant to applicable regulations of CBP, and whenever CBP agrees that entry under such a provision is appropriate, except for goods entered under heading 9802.00.80; and subheadings 9802.00.40, 9802.00.50, and 9802.00.60.
- For subheadings 9802.00.40, 9802.00.50, and 9802.00.60, the additional duties apply to the value of repairs, alterations, or processing performed (in Canada), as described in the applicable subheading.
- For heading 9802.00.80, the additional duties apply to the value of the article assembled abroad (in Canada), less the cost or value of such products of the United States, as described.
Foreign Trade Zones
Articles that are products of Canada, excluding those encompassed by 50 U.S.C. 1702(b), except those that are eligible for admission to a foreign trade zone under “domestic status” as defined in 19 CFR 146.43, and are admitted into a United States foreign trade zone on or after 12:01 a.m. eastern standard time on March 4, 2025, must be admitted as “privileged foreign status” as defined in 19 CFR 146.41.
Such articles will be subject, upon entry for consumption, to the duties imposed by this order and the rates of duty related to the classification under the applicable HTSUS subheading in effect at the time of admission into the United States foreign trade zone.
Drawback
No drawback is available with respect to the additional duties imposed pursuant to the Executive Order, as implemented in the Federal Register Notice.
De Minimis
The administrative exemption from duty and certain taxes at 19 U.S.C. 1321(a)(2)(C), known as the de minimis exemption, continues to be available for articles covered by headings 9903.01.10 and 9903.01.13 that are otherwise eligible for the exemption, including eligible articles sent to the United States through the international postal network.
Reporting
CBP will reject entry summaries that are not in compliance with the requirements of the Executive Orders identified above, including but not limited to, entry summaries filed without deposit of the required additional duties. If an entry summary is rejected, CBP will require a resubmission within two business days of the rejection, per existing policy. If the rejected entry summary is not resubmitted timely with payment, the importer of record may be subject to liquidated damages.
For entry summary lines that include multiple HTS numbers, CBP requires that the duty be appropriately associated to the correct HTS.
For example, if the entry is subject to 9903.01.10, then the 25% duty must be associated to 9903.01.10 when transmitting to ACE and when a printed 7501 is produced. The 25% duty must not be combined with the duty reported on a different HTS within the entry summary line. Further, duties across several required HTS numbers on a given entry summary line must not be combined and cannot be reported on only one HTS within the entry summary line.
CBP expects full compliance from the trade community for accurate reporting and payment of the additional duties.
HTS Sequence
When submitting an entry summary in which a heading or subheading in Chapter 98 and/or 99 is claimed on imported merchandise, a set sequence is to be followed. The sequence is outlined in the full guidance document.
UPDATED: February 4th 2025
ADDED: U.S. EXECUTIVE ORDER: Progress on the Situation at Our Northern Border – February 3rd 2025
ADDED: CBSA Customs Notice 25-04: Repeal of the United States Surtax Order (2025) – February 3, 2025
Previous Update:
U.S. Executive Order: Progress on the Situation at Our Northern Border (February 3, 2025)
- In recognition of the steps taken by the Government of Canada,…the additional 25 percent ad valorem rates of duty, and 10 percent ad valorem rates of duty as to energy products, shall be paused and will not take effect until March 4, 2025, at 12:01 a.m. eastern time
- Accordingly, section 2(a), section 2(b), section 2(e), and section 2(f) of the Executive Order of February 1, 2025, are amended by striking the term “February 4, 2025,” where it appears in those sections and inserting in lieu thereof the term “March 4, 2025.”
- The exceptions set forth in section 2(a) and section 2(b) of the Executive Order of February 1, 2025, related to covered goods loaded onto a vessel at a port of entry or in transit on the final mode of transport prior to entry into the United States are, hereby, withdraw
- During this pause, the Secretary of Homeland Security, in consultation with the Secretary of State, the Attorney General, the Assistant to the President for National Security Affairs, and the Assistant to the President for Homeland Security shall continue to assess the situation at our northern border, as provided in section 3 of the Executive Order of February 1, 2025
- If the illegal migration and illicit drug crises worsen, and if the Government of Canada fails to take sufficient steps to alleviate these crises, the President shall take necessary steps to address the situation, including by immediate implementation of the tariffs described in the Executive Order of February 1, 2025.
To review the full text of Executive Order, please click the following:
U.S. Executive Order: Progress on the Situation at Our Northern Border (February 3, 2025)
Customs Notice 25-04: Repeal of the United States Surtax Order (2025) – February 3, 2025
- Effective February 3, 2025, the United States Surtax Order (2025) SOR/2025-03 is repealed. Please note that importers will no longer be required to pay surtax pursuant to the above-referenced order
- For more information on the withdrawal of the surtax orders, within Canada call the Border Information Service at 1-800-461-9999. From outside Canada call 204-983-3500 or 506-636-5064. Long distance charges will apply. Agents are available Monday to Friday (08:00 – 16:00 local time / except holidays). TTY is also available within Canada: 1-866-335-3237
Date modified: 2025-02-03
To review a copy of the notice, please click the following:
Customs Notice 25-04: Repeal of the United States Surtax Order (2025) – February 3, 2025
Previous Post:
U.S. Executive Order: Imposing Duties to Address the Flow of Illicit Drugs Across Our Northern Border (February 1, 2025)
Here is a summary of President Trump’s Executive Order (February 1st, 2025) on Canada:
- Imposed under authority of the International Emergency Economic Powers Act (IEEPA)
- 25% rate on products of Canada, in addition to any other duties, taxes or fees owed; 10% on certain energy products
- Begins for goods imported on and after 12:01 AM February 4th
- Goods en route on or before 12:01 AM February 1st
- Canadian goods entered into FTZs on/after February 4th must be entered with “privileged foreign status” to lock in the higher tariff
- These duties will not be eligible for drawback
- Canadian-origin goods no longer eligible for “de minimis” tariff exemption ($800 and under) under 19 USC 1321
- Tariffs may be increased if Canada retaliates (which it has already done)
- Stated justification is, “influx of illegal immigrants an illicit opioids and other drugs”
To review the full text of Executive Order, please click the following:
Canada’s Counterpunch
Canada has swiftly announced its own set of retaliatory tariffs. Information specific to the announcement can be found in:
- Canada’s Order In Council: 2025-0072
- CBSA’s Customs Notice 25-03: United States Surtax Order (2025)
- Canada’s Department of Finance Canada – $30 Billion List of Products publication
Order In Council: 2025-0072
Below is a summary of Canada’s Order In Council: 2025-0072 dated February 1st 2025:
- Goods that originate in the United States means goods that are eligible to be marked as goods of the United States in accordance with the Determination of Country of Origin for the Purpose of Marking Goods (CUSMA Countries) Regulations.
- Does not apply to goods that originate in the United States that are in transit to Canada on the day on which this Order comes into force.
- Goods that originate in the United States that are classified under any of the tariff items set out in the schedule are subject to a surtax in the amount of 25% of the value for duty
- This Order comes into force on February 4, 2025, but if it is registered after that day, it comes into force on the day on which it is registered.
There are over 1250 specific tariff items named in this schedule. To review the complete Order In Council and the over 1250 specific tariffs subject to the 25% surtax, please click here.
Customs Notice 25-03: United States Surtax Order (2025), Ottawa, February 2, 2025
This notice provides information on the application of the United States Surtax Order (2025), specifically regarding surtax provisions effective February 4, 2025, on certain goods originating in the United States (U.S.). Below is a summary of the application and exceptions listed within the customs notice. To review the complete customs notice, please click here.
Application
- Effective February 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)
- 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
- The surtax will apply to goods imported for commercial and personal purposes, even when exported from a country other than the U.S. into Canada
- The surtax applies to goods, including those that may be classified in the tariff items of Chapter 99 of the Schedule to Canada’s Customs Tariff – with the exception of goods that are temporarily imported for repair in Canada or re-imported into Canada after being exported for repair
- The surtax does not apply to goods classified, or that should be classified in Chapter 98 of the Schedule to the Customs Tariff, other than goods of 9897.00.00, 9898.00.00 and 9899.00.00.
- 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)
Exceptions to Surtax
- 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.
- The surtax will not apply to U.S. goods that enter a Sufferance Warehouse on or before the day on which the surtax comes into force and subsequently enter the commerce of Canada (exit the sufferance warehouse)
- 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 OR Goods that are made in the U.S. and are repaired or altered across the border
Canadian Department of Finance Canada $30 Billion List of Products publication
Effective February 4, 2025, the government is imposing 25 per cent tariffs on $30 billion in goods imported from the United States (U.S.).
These tariffs only apply to goods originating from the U.S., which shall be considered as those goods eligible to be marked as a good of the U.S. in accordance with the Determination of Country of Origin for the Purposes of Marking Goods (CUSMA Countries) Regulations.
These countermeasures are effective immediately and will remain in place until the U.S. eliminates its tariffs against Canada. Canada’s countermeasures do not apply to U.S. goods that are in transit to Canada on the day on which they come into force.
To review the complete list of products outlined by the Department of Finance, please click here.
Please note this list should be read in conjunction with the Schedule to Canada’s Customs Tariff.
Emerging Trends: Adaptation in the Face of Adversity
As the tariff storm looms, industries are not standing idle. Several trends are emerging that could reshape the business landscape:
- Localization of Supply Chains: Companies are increasingly looking to source materials and components domestically to avoid tariffs.
- Digital Transformation: Businesses are accelerating their adoption of digital technologies to improve efficiency and offset potential tariff-related costs.
- Market Diversification: Both US and Canadian companies are exploring new international markets to reduce their dependence on cross-border trade.
- Innovation in Logistics: The push for more efficient and cost-effective transportation and inventory management is gaining momentum.
- Sustainability Focus: Some businesses are using this disruption as an opportunity to pivot towards more sustainable practices, potentially gaining a competitive edge.
The Ripple Effect: Beyond Borders and Balance Sheets
The impact of these tariffs extends far beyond corporate profits and government coffers. Communities on both sides of the border, particularly those in border regions, face an uncertain future. Jobs may be at risk, and the cost of living could rise as the effects of the tariffs trickle down to consumers.
Moreover, the US-Canada tariff war could have global implications. Other nations are watching closely, and the outcome of this trade dispute could influence international trade policies and negotiations worldwide.
Staying Ahead of the Curve
As we approach this pivotal moment in US-Canada economic relations, staying informed and adaptable is crucial. Whether you’re a business owner, an industry professional, or a concerned citizen, here are some steps you can take:
- Stay Informed: Keep abreast of the latest developments in the tariff situation. Follow reputable news sources and industry publications.
- Assess Your Exposure: Evaluate how these tariffs might impact your business or industry. Consider consulting with trade experts or financial advisors.
- Explore Alternatives: Look into alternative suppliers, markets, or business strategies that could help mitigate the impact of the tariffs.
- Engage with Policymakers: Make your voice heard. Reach out to your representatives to share your concerns and perspectives on the tariff situation.
- Prepare for Change: Develop contingency plans and be ready to adapt quickly as the situation evolves.
As February 4, 2025, approaches, the eyes of the business world will be fixed on the US-Canada border. This tariff war has the potential to reshape industries, alter consumer behaviors, and redefine one of the world’s most important trading relationships. By staying informed and proactive, we can navigate these choppy waters and emerge stronger on the other side.
Stay Updated on US-Canada Trade Developments
