March 4, 2025. In response to recent U.S. tariffs on Canadian imports, the Government of Canada has implemented the United States Surtax Order (2025-1), effective March 4, 2025. This measure imposes a 25% surtax on specific goods originating from the United States.
Key Points
- The surtax applies to certain U.S.-origin goods imported into Canada for both commercial and personal use.
- The surtax does not apply to goods classified under Chapter 98 of Canada’s Customs Tariff, with some exceptions.
- Goods eligible for the Duties Relief and Duty Drawback Programs may be eligible for surtax relief under the Canada-United States-Mexico Agreement (CUSMA).
Application & Proof of Origin
- Only goods that qualify as U.S. origin under the Determination of Country of Origin for Marking Regulations are subject to the surtax.
- Proof of origin is required at the time of importation and may include a commercial invoice or other documents per CUSMA requirements.
Calculation of the Surtax
The surtax is calculated as 25% of the value for duty (VFD). Below is an example of surtax calculation:
- Example 1: If an imported good has a VFD of $150 and a Most-Favoured-Nation (MFN) duty rate of 0%, the surtax payable is $37.50.
- Example 2: If an imported good has a VFD of $150, an MFN duty rate of 5%, and anti-dumping duties of $34, the surtax payable is $37.50. The total duties, taxes, and surtax payable amount to $90.45.
Exceptions & Exemptions
- U.S. goods in transit to Canada before the surtax took effect will not be subject to the surtax if importers provide supporting documentation.
- OEM tires classified under heading 40.11 of the Customs Tariff are exempt from the surtax, while aftermarket tires remain subject to it.
- Returning U.S.-origin goods previously duty-paid in Canada are exempt from the surtax.
- Goods sent for repair or alteration in the U.S. and re-imported into Canada are also exempt.
Accounting & Compliance
- Importers must declare the surtax amount when completing a Commercial Accounting Declaration (CAD) via the CARM Client Portal (CCP), Electronic Data Interchange (EDI), or Application Programming Interface (API).
- The surtax code is 25066A, and it must be entered in field 85 of the CAD.
- Goods eligible for exemption must be declared as non-subject to the surtax at the time of accounting.
Corrections & Refunds
- Importers may request adjustments to declarations through the prescribed procedures under the Customs Act.
- If surtax was incorrectly self-assessed, an adjustment may be submitted via CCP or EDI/API.
- Refund requests for casual goods must be submitted using Form B2G, CBSA Informal Adjustment Request.
Enforcement & Compliance Monitoring
- CBSA may conduct examinations and post-release verifications to ensure compliance.
- Non-compliance may result in additional duties, penalties, and interest charges.
Advance Rulings & Recourse
- Importers may request advance rulings regarding FTA origin, tariff classification, or marking requirements.
- Those receiving a notice of re-determination may request a review under section 60 of the Customs Act within 90 days after paying the assessed amount.
For more details, please refer to Memorandum D16-1-1 regarding surtax application and adjustment procedures.