On June 29, 2018, Foreign Affairs Minister Chrystia Freeland announced which products will receive retaliatory tariffs (also referred to as surtax) upon importation into Canada.

There are three lists of products, the first will receive a 25% tariff and the other two 10% and will remain in place until the U.S. removes the tariffs on Canadian steel and aluminum imports.

The finalized list was created after consultation with the Canadian business community most affected by these additional tariffs.

On Which Products Will The Surtax Be Imposed?

The lists of commodities affected appears in the three tables published by the Department of Finance Canada and includes many steel, aluminum and other products including coffee, ballpoint pens, and ketchup.

Canada Imposes Provisional Safeguard Surtax On Seven Steel Products

What Products Are Considered Originating from the U.S.?

The surtax will only be applied to goods that appear in these three tables and are considered originating from the U.S. in accordance with the Determination of Country of Origin for the Purposes of Marking Goods (NAFTA Countries) Regulations.

How Is The Surtax Calculated?

According to the Canada Border Services Agency (CBSA), the surtax is calculated on the Value for Duty and if in addition to the duty rate:

Where The Item Is Duty-Free

"The value for duty (VFD) of an imported good subject to a surtax is $150 CAD. The imported good has a Most Favored Nation (MFN) duty rate of zero percent. The applicable surtax is 10 percent, as per the Schedule to the United States Surtax Order (Other Goods).

The amount of surtax is calculated as follows: $150 (VFD) x 0.10 (per cent surtax) = $15 (surtax payable)" Source

Where The Item Has Duty

"The same imported good is subject to an MFN duty rate of 8 percent.

The amount of customs duties is calculated as follows: $150 (VFD) x 0.08 (rate of Customs duty) = $12 (Customs duties payable)

The amount of surtax is calculated as follows:

$150 (VFD) x 0.10 (per cent surtax) = $15 (surtax payable)" Source

Are There Any Exemptions?

The surtax will NOT be applied to some headings of Chapter 98 of the Customs Tariff including:

  • 98.01 Conveyances or containers of Chapters 86, 87, 88 or 89, engaged in the international commercial transportation of goods or passengers 
  • 98.02 Conveyances temporarily imported by a resident of Canada for international non-commercial transportation 
  • 98.03 Conveyances and baggage temporarily imported by non-residents 
  • 98.04 (other than tariff item No. 9804.30.00) Travelers exemptions 
  • 98.05 Goods imported by a former resident of Canada returning to Canada to resume residence

The surtax takes effect July 1st, 2018 and will be applied to all products listed in the three tables originating from the U.S. However, if the goods can be proven to be in-transit before July 1st, they will not have the surtax imposed upon importation. Proof of date of direct shipment must be provided in the form of sales or purchase orders, bills of lading, report of entry and cargo control documents.

Are You Eligible To Request Remission Of Canada's New U.S. Surtaxes?

If you need assistance or guidance with commodities affected by the new surtax, please contact us to speak with a trade advisor for expert advice.

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About Author
Gloria Terhaar
CCS, CTCS, CBSA Professional Designate

Gloria Terhaar has over 17 years of Canadian customs brokerage experience. She currently works in our Canadian division as a Trade Compliance Supervisor and Regulatory Compliance Specialist. Gloria has extensive experience in all aspects of documentation and regulatory requirements as they relate to importing products into Canada. Gloria is often called upon to train industry with some recent talks for MNP, the Surrey Board of Trade, TFO Canada and the BC Produce Marketing Association. In 2018, Gloria also participated in the Canadian Produce Marketing Association and the Canadian Horticultural Council advocacy event "Fall Harvest" in Ottawa where she participated in advocacy efforts for the Canadain produce industry.

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While we strive for accuracy in all our communications, as the Importer of Record it is incumbent upon your company to ensure that you are aware of the requirements under the new regulations so that you maintain compliance as always.