In response to the United States’ decision to impose tariffs on all Canadian goods, on February 1, 2025, Prime Minister Justin Trudeau announced that Canada would implement a 25% retaliatory tariff on a range of U.S. imports. 

UPDATE: However, as of February 3rd, 2025, these governments have reached an agreement that will pause the implementation of tariffs for at least 30 days.  You can find the Customs Notice here:  https://www.cbsa-asfc.gc.ca/publications/cn-ad/cn25-04-eng.html"

If these tariffs are still enforced, the initial list of affected goods includes over $155 billion of U.S. products.  The tariffs are set to be applied in phases, with an initial $30 billion targeting goods ranging from orange juice, peanut butter, coffee, cosmetics, pulp and paper, wine, spirits, beer, apparel, footwear, motorcycles, and appliances.  You can find the list of products at the 8-digit HS level here:  List of products from the United States subject to 25 percent tariffs effective February 4, 2025 - Canada.ca.

The Minister of Finance also announced that the government intends to impose tariffs on an additional list of imported U.S. goods worth $125 billion. A complete list of these goods will be made available for a 21-day public comment period before implementation; they will include products such as passenger vehicles and trucks, including electric cars, steel and aluminum products, specific fruits and vegetables, aerospace products, beef, pork, dairy, trucks and buses, recreational vehicles, and recreational boats.

These measures encourage the U.S. to reconsider its tariff policies and protect Canadian economic interests. Businesses and consumers must stay informed about these developments, which may impact pricing and supply chains. Consulting with trade experts and monitoring official government communications can guide navigating this evolving trade landscape.

Companies are facing increased costs that impact their bottom line. However, with the right strategy, Canadian importers can minimize the financial burden and thrive in a competitive market. The Retaliatory tariffs will affect a wide range of products, making it essential for Canadian importers to understand how these duties apply to their specific goods. Whether you are importing raw materials or finished products, correctly classifying your goods and exploring trade agreement benefits can make a significant difference.

Strategies to Reduce Tariff Costs

1. Optimize Tariff Classification

Many businesses unknowingly pay higher duties due to incorrect product classification. A strategic review of your HS codes can help identify opportunities for reclassification, ensuring you pay the lowest applicable tariff.

2. Utilize Free Trade Agreements

Goods covered under CUSMA will still exempt the Most Favoured Nations (MFN) tariff rate but will attract the 25% tariff.  Trade agreements like CPTPP and CETA offer preferential tariff rates for eligible products. Proper documentation and compliance with rules of origin can allow you to benefit from duty-free or reduced-duty imports.

3. Explore Duty Deferral & Drawback Programs

Canada offers several programs that can help importers recover or defer duties, including:

• Duty Drawback Program – Refunds duties paid on goods imported into Canada that are subsequently exported.

• Duty Relief Program – Allows companies to defer duty payments on imported goods that are eventually exported.

• Bonded Warehousing – Enables storage of imported goods without paying duties until they enter the Canadian market.

Unlike the U.S., Canada allows all importers to claim drawback on tariffs paid.

4. Diversify Your Supply Chain

With the tariffs levied on U.S. goods, it may be time to consider alternative suppliers from countries with lower or no tariffs. Shifting supply chains can be complex but can lead to significant cost savings.

5. Apply for Tariff Exemptions

Canadian businesses may sometimes qualify for tariff exemptions or remissions on specific goods. Understanding these exemptions and applying for them can significantly reduce costs.

Tradewin is here to help:

✔ Tariff Classification Reviews – Ensuring accurate HS codes to minimize duties.

✔ Trade Agreement Compliance – Helping you take full advantage of CUSMA, CPTPP, CETA, and others. Canada has 15 free trade agreements with 51 countries.

✔ Duty Recovery & Exemptions – Identifying opportunities for duty refunds or reductions.

✔ Supply Chain Optimization – Finding alternative suppliers or tariff-free sourcing options.

✔ Government & CBSA Liaison – Assisting with tariff exemption applications and compliance.

For more information about managing the tariffs in place, contact Tradewin for assistance.

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