Effective September 8^th, Canada imposed new 15%, 25% and 50% surtaxes on certain goods originating in the United States in response to the US section 338 tariffs on Canadian goods. Orders In Council

Key Takeaways for Importers:

• Origin Matters
  The surtax applies to goods that originate in the US based on the Determination of Country of Origin for the Purpose of Marking Goods (CUSMA Countries) Regulations. The details of the regulations are here: https://laws-lois.justice.gc.ca/eng/regulations/SOR-94-23/

• The Surtax is based on the Value for Duty
  The applicable 15%, 25%, or 50% surtax is calculated on the custom (Canadian $) value and is in addition to other applicable duties, including SIMA duties where applicable.

• Goods already in transit are exempt
  The surtax will not apply to US goods that are in transit to Canada on the day the surtax comes into force. Importers must retain documentation, such as a bill of lading, demonstrating that the goods were already under control of a carrier.

• Chapter 98 and 99 provisions
  Goods classified under Chapter 98 and 99 are exempt from the surtax unless the applicable Chapter 98 or 99 tariff item is specifically listed in Schedule 4 of the Order.
  
  
• Duty recovery opportunities remain available
  CBSA has confirmed that Canada’s Duties Relief and Duty Drawback Programs are available for surtax paid or payable, subject to applicable CUSMA requirements. When CUSMA applies to the goods, the goods are not subject to the “lesser of two duties” rule.
  
  
• Remission of Surtaxes
  The government has confirmed continuity for importers already benefiting from surtax relief by extending the existing remission framework to the new tariffs. Further, the government will also still consider new applications for relief.

What should Importers Do Now?

• Importers should review affected tariff classifications, confirm origin, and quantify their surtax exposure. With surtax rates reaching 50%, classification, origin and valuation decisions have become even more consequential.
  
  
• Business should also evaluate whether drawback, duties relief, remission or other available exceptions can reduce the financial impact. Tradewin can assist in assessing exposure, identifying available relief and developing strategies to mitigate the impact of Canada’s latest measures. 

Contact Tradewin to discuss how these changes may affect your Canadian imports. We’re here to help.