The ongoing tariff dispute between the U.S. and Canada has led to significant measures from both countries. As the situation remains dynamic, key strategies for Canadian businesses to manage these risks include using bonded warehouses, transfer pricing, tariff engineering, and diversifying supply chains.
U.S. tariffs on most Canadian goods—and Canada’s reciprocal measures—went into effect March 4 following a month-long delay. While tariffs on some Canadian goods were subsequently paused, tremendous trade uncertainty remains on both sides of the border.
The tariff situation continues to evolve as the U.S. administration eyes new products for protective tariffs and Canada rolls out its response at the federal and provincial levels.
Although the ongoing uncertainty makes planning tariff mitigation more complicated, the following strategies are still available for middle market companies:
You can read more about the ongoing tariff dispute below. The measures detailed below were accurate as of March 6 and are subject to change.
The following tariffs impacting goods originating from Canada have been confirmed by executive order or official statement from the White House.
The term “CUSMA goods” refers to goods which meet the Canada-United States-Mexico Free Trade Agreement (CUSMA) rules of origin for goods originating in the territory of Canada, the US and Mexico. Generally speaking, CUSMA goods will be wholly obtained or produced in North America, and/or meet requirements on regional content, processing or changes in tariff classification outlined in the CUSMA.
|
Scheduled effective date |
Amount |
Affected goods |
|
March 4 – March 6 |
10% |
Energy and energy resources[1] |
|
March 4 – March 6 |
25% |
All, except energy and energy resources |
|
March 7 |
10% |
Energy, energy resources, and potash which are not CUSMA goods |
|
March 7 |
25% |
All non-CUSMA goods not captured in the 10% tariff. |
|
March 12 |
25% |
Steel and aluminium products and derivatives |
Products whose value does not exceed US $800 will qualify for the de minimis exemption to the tariffs. The exception is only a temporary reprieve for goods subject to the March 7 tariffs as it will be removed once systems are in place to collect tariffs on these low-value imports.
U.S. President Donald Trump has also indicated the administration is considering the following additional tariffs. The details, including countries impacted, are not publicly finalized.
|
Scheduled effective date |
Details |
|
April 2 |
Reciprocal tariffs |
|
April 2 |
Automobiles and agricultural products |
|
Unknown |
Approximately 25% tariff on semiconductors and pharmaceuticals |
Along with the previously announced tariffs, the U.S. has indicated it is conducting reviews into other areas of concern:
Prime Minister Justin Trudeau confirmed on March 4 that Canada would implement a two-phase tariff response originally announced on Feb. 1. Trudeau added he would work with the provinces on further measures and look for other ways to support affected Canadians. One potential option he suggested was expansion and additional flexibility for employment insurance (EI).
Innovation Minister François-Philippe Champagne announced the guidance to the Investment Canada Act will be updated to require consideration of Canada’s economic security in allowing foreign acquisitions of or mergers with Canadian companies.
Along with initiating disputes before the World Trade Organization and using the CUSMA dispute resolution measures, Canada implemented its two-phase tariff response. A 25 per cent tariff was imposed on a subset of goods originating from the US on March 4 and is scheduled to extend to a further list of goods following a 21-day consultation period. This tariff applies to both commercial and personal-use goods.
The following is a non-exhaustive and high-level list of impacted goods:
You can find a full list from the federal government in this release.
You can find a full list from the federal government in this release.
Importers will be able to make use of Canada’s duties relief and duty drawback programs (subject to CUSMA) to bypass tariffs or receive a refund of tariffs on previously imported goods which are exported from Canada.
Many Canadian provinces are introducing their own responses to U.S. tariffs using measures within their jurisdiction—while some premiers are pushing to lower barriers to interprovincial trade.
Outlined below are measures from the provincial governments of Alberta, British Columbia, Quebec and Ontario. The roll-out of these provinces’ respective budgets is being covered here.
Alberta announced it will no longer be purchasing alcohol or video lottery terminals from the U.S., nor will government entities—both provincial and municipal—be making purchases of goods and services from the U.S.
B.C. announced that:
B.C. Premier David Eby also indicated he’s looking to introduce support for affected businesses and individuals but did not provide details.
The province-run LCBO has removed U.S. alcohol from its shelves, and U.S. companies will no longer be considered in government procurement and infrastructure contracts. A 25 per cent export tariff on electricity headed to Michigan, New York and Minnesota will apply as of March 10. Ontario Premier Doug Ford indicated he is considering other measures as well.
Quebec’s government asked the province-run SAQ to no longer sell or supply U.S. alcohol. The province will also impose a penalty of 25 per cent on U.S. companies bidding on government contracts without an existing presence in Quebec. Quebec said it will support affected domestic businesses by allowing companies to qualify for up to $50 million in liquidity loans with a maximum term of seven years.
[1] Includes 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
