On July 1, 2018, the federal government imposed tariffs on nearly $13 billion ($16.6 billion CAN) of U.S. goods. The tariffs were outlined in the Department of Finance’s publication, Countermeasures in Response to Unjustified Tariffs on Canadian Steel and Aluminum Products. These tariffs are in response to similar ones placed by President Donald Trump’s administration on Canadian aluminum and steel back in May 2018.
The list of U.S. products hit with retaliatory tariffs vary, but mostly include consumer products like musical instruments, motorboats, yogourt and bourbon, among others. Notably, the largest tariffs will fall on U.S. steel and aluminum. The following is a general breakdown of the tariffs:
- Surtaxes will be imposed at a rate of 25 per cent for U.S. steel imports and 10 per cent for U.S. aluminum and other originating goods. A full list of products, broken down by category, can be reviewed here.
- The tariff countermeasures don’t apply to U.S. originating goods that were in transit to Canada when the countermeasures came into force.
The Canadian Steel Producers Association has said that the U.S. and Canada export roughly the same amount of steel to each other annually as part of $2 billion/day cross-border trade network. Experts are also concerned that a potential trade war could cost tens of thousands of jobs and further damage Canada-U.S. relations.
In order to respond effectively to the tariffs, businesses should consider the following:
- The surtaxes only apply to U.S. originating goods. This means goods that are transshipped through the U.S. are not impacted by the surtaxes.
- Surtaxes are determined based on the Harmonized Item Description and Coding System. Businesses should carefully examine their goods to determine whether their imports are subject to surtaxes. While your company’s own logistics and customs experts are useful starting points, consultation with expert trade law counsel is recommended.
- Consider investigating alternate sources of supply from non-U.S. sources.
- Businesses may be granted special consideration by the government for tariff relief. Consider retaining experienced external counsel that can assist you when seeking tariff exclusions.
- It’s important to review contractual terms with suppliers and customers to determine which party is liable for surtaxes.
To learn more about the tariffs, click here.