Canada-U.S. Trade War

Under CUSMA, Canadian exports must meet "rules of origin" requirements to qualify for tariff-free access. Goods that are grown or harvested in Canada are automatically compliant. However, manufactured products must meet specific criteria to qualify. To avoid the complex certification process, many businesses choose to pay the "Most Favoured Nation" (MFN) tariff, which has recently increased from 2.5% to 25% for certain goods.

Please refer to CBSA’s “ how to certify the origin of goods” for more information.   

Yes, even if your business has a U.S. holding company or a U.S. subsidiary, you may still be subject to U.S. tariffs.

Initially, the U.S. administration claimed tariffs were necessary to address the flow of illegal drugs, particularly fentanyl, and illegal immigration, which it considers significant threats to national security. The president has also highlighted the trade deficit between the U.S. and Canada as a reason for the tariffs.

To avoid the initial implementation date of February 4^th, a deal was reached to delay the tariffs by one month after Canada and Mexico agreed to introduce new border security measures that addressed U.S. concerns. Canada has invested in increased enforcement at the border in an effort to satisfy the U.S. and prevent economic penalties.

At this time, it remains unclear what additional steps Canada may need to take to permanently remove the threat of tariffs. While the initial agreement focused on border security, President Trump has suggested he is seeking broader economic concessions.

No, it is our understanding your goods are exempt from the new tariffs if they’re in their final mode of transit when the tariffs took effect (March 4th at 12:01am EST). However, if your goods were shipped between March 4th and March 7th, before the new exemption on "CUSMA-compliant goods" was applied, they would be subject to the 25% tariff. 

If your goods are “CUSMA-compliant,”, they qualify for tariff-free access. Goods that do not meet CUSMA requirements are subject to a 25% tariff. These tariffs are paid by the importer (typically U.S.-based businesses) to U.S. Customs and Border Protection (USCBP). 

De minimis treatment allows certain low-value imports (under $800) to enter the U.S. without being subject to tariffs or duties. De minimis treatment remains in place for the time being, although it could eventually be phased out.

While CUSMA eliminates most tariffs on goods traded between Canada, the U.S., and Mexico, it does not prevent the application of certain tariffs outside the agreement. In fact, CUSMA includes a clause on essential security, which states that nothing in the agreement precludes any of the parties from applying measures that it considers necessary for the fulfilment of its obligations with respect to the maintenance or restoration of international peace or security, or the protection of its own essential security interests.

For this reason, the U.S. can impose tariffs national security reasons.

No, tariffs are taxes imposed on physical goods as they cross the border. They do not apply to intangible property, such as software or technology licenses, or to cross-border services.

Your business may be eligible under the new Remission Order if it imports goods from the U.S. for any of the following purposes in Canada:

• Manufacture or processing of any good or the packaging of a food or beverage (special authorization code 25-0466C).
• Public health, public safety (e.g., police, fire, ambulance), and National Security (special authorization code 25-0466A).
• Health care services, including dental and long-term care (special authorization code 25-0466B).
• Specific products such as infant formulas, nutrition formulas, medical compression garments, among others (special authorization code 25-0466D).

The Order provides relief for goods imported into Canada for a 6-month period, from April 16 to October 15, 2025, and retroactively for goods imported since March 4. Remission can be claimed to waive the payment of tariffs at the time of importation, and importers may seek a refund for tariffs already paid. Further details on the Remission Order can be found in the CBSA Customs Notice 25-19: United States Surtax Remission Order (2025).

To apply for remission, you must enter a Special Authority OIC field (e.g., 25-0466A, 25-0466B, etc.) on your Commercial Accounting Declaration (CAD) form. This can be submitted via the CARM Client Portal (CCP).

No, goods that are already in transit to Canada when the tariffs take effect on March 4^th at 12:01am EST will be exempt.

While the formal consultation has now concluded, Canadians are welcome to share their ideas and comments with the Department of Finance at any time.

The Canada Border Services Agency (CBSA) is fully prepared to collect tariffs, and the process remains unchanged. Tariffs will continue to be administered through the CBSA Assessment and Revenue Management (CARM) system, following the same procedures as before. Importers should declare goods as usual, ensure compliance with CBSA regulations, and pay any applicable surtaxes through CARM or their customs broker.

Canada has invested over $1 billion in new equipment and security measures to combat drug trafficking and illegal immigration, which aims to address U.S. concerns and avoid Trump’s tariffs. Specifically, Canada has increased investment in technology (such as, new drones and helicopters), increased personnel, and enhanced intelligence sharing. The government has also introduced new policies and programs to improve security and efficiency. Despite these investments and efforts, Trump is proceeding with tariffs, stating that Canada hasn't done enough.

See here for more detail on Canada’s Border Plan.

According to U.S. and Canadian government data:

• Less than 1% of fentanyl entering the U.S. comes from Canada.
• Over the past two years, about 6% of illegal immigrants at the U.S. border were stopped at our border. 

No. Goods that are simply transiting through the U.S. on their way to Mexico should not be impacted by tariffs. As long as the goods do not undergo any changes or enter U.S. commerce, they are not subject to the U.S. tariffs. However, if the goods are processed or enter the U.S. market before continuing to Mexico, they may be subject to the applicable tariffs.

Canadian governments need a unified and proactive response to minimize harm to businesses and the economy. Governments must focus on reducing the tax burden, cutting red tape, addressing internal trade barriers, and strengthening border measures to help small businesses stay competitive.

President Trump has announced a 10% tariff on all imports from all countries, effective April 5, 2025, at 12:01 a.m. EDT.

Additionally, for countries with which the U.S. has the largest trade deficits, a higher, individualized reciprocal tariff will apply, starting April 9, 2025, at 12:01 a.m. EDT.

The de minimis rule allows low-value imports (valued at or under $800) to enter the U.S. duty-free. However, under a new Executive Order, this exemption will no longer apply to goods from the People’s Republic of China (PRC) and Hong Kong, effective May 2, 2025, at 12:01 a.m. EDT. As a result, all covered goods from these regions will now be subject to applicable duties and tariffs. The new policy applies to all imported goods valued at or under $800 that would have otherwise qualified for the de minimis exemption. This includes shipments arriving through private carriers (e.g., couriers, freight forwarders) as well as postal shipments.

For shipments arriving through the international postal network:

• Starting May 2, 2025, items containing goods valued at or under $800 will be subject to a duty of either 30% of their value or $25 per item, whichever is greater.
• After June 1, 2025, the per-item duty will increase to $50.
• These duties replace any other previously imposed tariffs or duties on affected goods.

This policy is currently targeting goods from China and Hong Kong. Imports from other countries that qualify for the de minimis exemption will continue to receive duty-free treatment.

The Chinese government has put in place 100% tariffs on Canadian canola oil, canola meal, peas, and 25% on Canadian pork and aquatic products including lobster, among others, effective March 20, 2025. These measures are in direct response to the tariffs Canada introduced in October 2024 on Chinese-made electric vehicles, steel, and aluminum products.

Given that the Chinese tariffs primarily target agri-businesses, the federal government has announced the expansion of support programs to help those impacted by the trade disruptions, including: Business Risk Management programs like Agri-Invest and Agri-Stability, as well as Farm Credit Canada’s Trade Disruption Customer Support program.

Work-Sharing is an agreement between employers, employees and the Government of Canada (Service Canada). The Work-Sharing Program helps employers and employees avoid layoffs, when there is a temporary decrease in the normal level of business activity that is beyond the control of the employer.

The Government of Canada has introduced special measures to better support employers and their employees in the wake of U.S. tariffs threats. These special measures, including expanded employer and employee eligibility, are in effect from March 7, 2025, until March 6, 2026.

Eligibility has been expanded:

• to businesses that have been in operation in Canada for 1 year
• to include non-profit and charitable organizations experiencing a reduction in revenue levels as a direct or indirect result of the tariffs
• to include cyclical or seasonal employers
• to employers experiencing a decrease in work activity over the past six months of less than 10% and allowing utilization of Work-Sharing to exceed 60%
• to employees who are not year-round, permanent, full-time or part-time employees, specifically seasonal or cyclical employees
• to employees assisting the employer recovery efforts

For more on the Work Sharing program, please visit this webpage.

Canada has 15 free trade agreements (FTAs) covering 51 countries¹. These agreements provide Canadian businesses with preferential market access, reduced tariffs, and stronger trade rules. Here’s an overview of some of Canada’s key FTAs:

¹ Global Affairs Canada (GAC), Canada’s State of Trade 2022: The Benefits of Free Trade Agreements: A review of trade and investment in the previous year and a look at how free trade agreements have benefitted Canada.