Canada’s Counter-Tariffs on $27.6 Billion of U.S. Goods Take Effect

Canada’s new counter-tariffs on U.S. goods took effect Tuesday, putting surtaxes of 15%, 25% and 50% on products covering $27.6 billion in imports from the United States. The measures began at 12:01 a.m. on September 8 and apply at different rates depending on the tariff classification of the imported product.

Ottawa announced the response after the United States imposed 50% tariffs on $27.6 billion of Canadian goods effective August 22. The Canadian government said it would match the U.S. measures dollar for dollar and rate for rate, adding another layer to a trade dispute that had already left Canadian counter-tariffs on U.S. steel, aluminum and automobiles in place.

Rates vary by product, with some metal tariffs rising

The Department of Finance Canada’s authoritative product list says the September 8 measures are concentrated in steel and aluminum, dairy, appliances, agricultural equipment, pulp and paper, plastics and electronics. The government said the affected product lines were drawn from goods targeted by U.S. Section 338 and Section 232 tariffs, with the Canadian rate generally set to correspond to the U.S. rate on the same goods.

Some of the highest rates apply where Canada had already imposed counter-tariffs. Finance Canada said certain steel and aluminum products that had been subject to a 25% Canadian surtax now face a 50% rate. Furniture and clothing and apparel are also among goods subject to 50% counter-tariffs, while 25% rates cover products including appliances, dairy goods such as cheese, and certain steel and aluminum derivative products.

The 15% schedule covers a narrower group of tariff items, including selected machinery and equipment classifications. The legal order divides the affected goods among three schedules corresponding to the 15%, 25% and 50% rates, so the cost faced by an importer depends on the specific tariff item rather than on a single across-the-board levy.

Canada is matching a broader U.S. tariff escalation

The immediate trigger was the U.S. use of Section 338 of the Tariff Act of 1930. White House proclamations issued in July imposed additional 50% duties on certain Canadian products in disputes involving alcoholic beverages, dairy and motor vehicles. A subsequent August 18 proclamation shifted the effective date of those additional duties to August 22 after a temporary three-day suspension.

Canada’s response does not simply mirror one list of U.S. products. Ottawa said its schedule draws from products affected by both the new U.S. Section 338 tariffs and existing U.S. Section 232 tariffs. That approach means the September 8 package includes newly targeted product lines as well as higher Canadian rates on some steel and aluminum goods that were already subject to counter-tariffs.

Existing Canadian counter-tariffs on U.S. automobiles remain in force, and Ottawa says its tariff remission framework also continues to operate. The September 8 action therefore adds to earlier measures rather than replacing the auto response, while some steel and aluminum product lines move to higher rates under the new schedule.

The government paired the tariff announcement with $7.5 billion in new and enhanced support for workers and businesses affected by the trade conflict. The package announced August 25 included an additional $1.5 billion for the Regional Tariff Response Initiative, a new $500 million liquidity stream under the Business Development Bank of Canada’s Pivot to Grow program, another $2 billion for the Canada Strong Diversification Fund and $3.5 billion in rapid-response supports for workers and employers. Ottawa also announced new flexibility for its Large Enterprise Tariff Loan facility.

Border rules determine which imports actually pay the surtax

The Canada Border Services Agency’s implementation notice, issued September 7, says the new surtax is calculated as 15%, 25% or 50% of the imported good’s value for duty. It applies to both commercial and casual imports when the goods originate in the United States, and the surtax can apply even if the goods are shipped to Canada from a country other than the United States.

Origin is determined using Canada’s marking rules for CUSMA countries. Under the order, goods are treated as originating in the United States when they are eligible to be marked as U.S. goods under those rules. The CBSA notice also says goods eligible to be marked as originating in Puerto Rico, Guam, the Northern Mariana Islands, American Samoa or the U.S. Virgin Islands are not treated as U.S.-origin goods for this surtax.

There is an important timing exception for shipments already moving toward Canada. Goods that were in transit to Canada when the order came into force are exempt, but importers must be able to show that the shipment was bound for Canada and under a carrier’s control before the effective time. The CBSA says supporting records may include bills of lading, report-of-entry documents and cargo-control documents.

The order also contains other exceptions, including for many goods classified under Chapters 98 and 99 of Canada’s tariff schedule unless a relevant tariff item is specifically listed, as well as a limited exemption for certain personal or household goods brought through the Campobello Island port of entry. Goods imported under qualifying permits for the Import for Re-Export Program are also excluded.

Canadian businesses can still seek tariff remission in exceptional circumstances. Finance Canada says it may consider relief where goods used as inputs cannot be sourced domestically or reasonably from non-U.S. suppliers, or where other exceptional circumstances could cause severe harm to the Canadian economy. Remission is not automatic, and requests are assessed case by case before any recommendation is made to the Minister of Finance and, if approved, the Governor in Council.

For commercial imports that are subject to the new surtax, the CBSA requires importers to declare the applicable rate through Canada’s commercial accounting system. The agency has assigned separate surtax codes for the 15%, 25% and 50% schedules, and it can review origin, tariff classification and value for duty after release. Those accounting rules are now in effect alongside the September 8 tariff schedule.