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Days after Canada-U.S. trade talks collapsed and President Trump followed through with his threat to impose new 50 percent tariffs on US$20 billion of imports from Canada, Canada has responded by announcing new and increased retaliatory surtaxes — tariffs by another name — on U.S. imports, effective September 8, 2026. These surtaxes will be in addition to or increase existing surtaxes on U.S. steel and aluminum, motor vehicle, and steel derivative goods imposed by Canada in response to previous U.S. tariffs.
An economic relationship that, despite irritants, was for many years a model for trade liberalization and economic integration is quickly deteriorating into a trade war with attendant risks for tariff-exposed businesses.
A comprehensive list of all U.S. goods subject to Canadian tariffs, including the latest surtaxes, can be found on the Government of Canada’s website.
We expect the Canadian government will provide additional details of how it will give effect to and administer the new surtaxes when it publishes the orders implementing them, and in accompanying Canada Border Services Agency customs notices. When this additional guidance becomes available, we will publish a new Update with critical legal and compliance information.
In the meantime, the following tables summarize the tariff landscape for Canada-U.S. trade:
| Canadian tariffs | |||
|---|---|---|---|
| Effective date | Sector | Details | Exemptions and remissions |
| September 8, 2026 | New or increased tariffs on goods in multiple sectors | 15%, 25% and 50% surtax on a broad range of goods. See below for details. | Exemption for goods in-transit on September 8. How this exemption applies to goods subject to prior surtaxes (e.g., steel and aluminum, motor vehicles) is not yet specified. Remissions and exemptions issued under the United States Surtax Remission Order remain available. Details on standing remissions for steel derivative goods have not yet been provided. Remission applications for discretionary relief can be made pursuant to section 115 of the Customs Tariff. |
| August 29, 2025 (increases effective September 8, 2026) | Steel and aluminum | Current: 25% on certain steel and aluminum goods September 8, 2026: surtax increased to 50% for the majority of goods |
Standing remission available to goods imported for use: – by certain entities for the purpose of health care, public health, public safety, national defence or national security; – in providing health care services; – in Canada, in the manufacture or processing of any good, in the production of any agricultural product, or in the packaging of a food or beverage; – in the manufacture of motor vehicles, chassis, parts, accessories, aircraft, spacecraft, ground flying trainers, or parts Remission is also available for certain listed goods and businesses. Remission applications for discretionary relief can be made pursuant to section 115 of the Customs Tariff. |
| April 9, 2025 | Motor vehicles | 25% on non-CUSMA vehicles imported from the U.S. 25% on the non-Canadian, non-Mexican content of CUSMA vehicles imported from the U.S. Will remain in force at same levels come September 8, 2026. |
Standing remission available to: – goods imported for use by certain entities for the purpose of health care, public health, public safety, national defence or national security; – goods imported for use in providing health care services; – all-terrain vehicles and hearses Remission is also available for certain listed goods and businesses. Remission applications for discretionary relief can be made pursuant to section 115 of the Customs Tariff. |
| December 26, 2025 (increases effective September 8, 2026, for U.S. goods) | Steel derivative goods | Current: 25% global surtax on certain steel derivative goods, including U.S. goods September 8, 2026: surtax on majority of U.S. goods increased to 50% |
Standing remission available to goods imported: – for use by certain entities for the purpose of health care, public health, public safety, national defence or national security; – for use in health care services; – in respect of utility wind towers and sections, for installation on an offshore energy project Remission is also available to certain listed goods and businesses. Remission applications for discretionary relief can be made pursuant to section 115 of the Customs Tariff. |
| United States tariffs | ||||
|---|---|---|---|---|
| Effective date | Legal basis | Coverage | Duty rate | Interaction with other U.S. tariffs and exemptions |
| August 22, 2026 | Section 338 of the Tariff Act of 1930 | Specific to Canada and covering many categories of goods. See below for details. | 50% | Applies in addition to other duties or taxes, including anti-dumping or countervailing duties except for section 232 tariffs. No exemption for CUSMA-originating goods. |
| April 3, 2025 | Section 232 of the Trade Expansion Act of 1962 | Autos, trucks and their parts | 25% | Apply in addition to any other duties or taxes, including existing anti-dumping or countervailing duties. Do not apply on top of section 301 or section 338 tariffs. No exemption for CUSMA-originating goods. |
| April 6, 2026 | Section 232 | Steel, aluminum, copper and their derivative goods | 10% to 50% | |
| October 14, 2025 | Section 232 | Softwood lumber and timber | 10% | |
| October 14, 2025 | Section 232 | Upholstered furniture, kitchen cabinets and vanities | 25% | |
| November 1, 2025 | Section 232 | Buses | 10% | |
| January 15, 2026 | Section 232 | Certain semiconductors and derivative products | 25% | |
| July 24, 2026 | Section 301 of the Trade Act of 1974 | Global, subject to exclusions (imposed on 60 economies, and at several different rates purportedly in response to forced labour import practices) | 10% for imports from Canada | Applies in addition to any other duties or taxes, including existing anti-dumping or countervailing duties, except for section 232 tariffs. Exemption for CUSMA-originating goods. |
Canada’s September 8 retaliatory surtaxes
Canada’s new retaliatory surtaxes cover a broad range of U.S. goods, constituting approximately $27.6 billion of U.S. imports.
In addition to maintaining the surtax on motor vehicles at 25% and increasing the surtax rates on the vast majority of U.S. steel, aluminum and steel derivative goods to 50%, goods subject to new surtaxes include the following:
- certain softwood and hardwood products (e.g., sawn or chipped wood, plywood, veneered panels, wood pulp, certain paper products including paper and paperboard, boxes, toilet and similar paper): 25% to 50% depending on good
- certain furniture (e.g., domestic seating, wooden furniture, plastic furniture, metal furniture, parts): 25% to 50% depending on good
- certain foodstuffs (e.g., dairy products, fish and seafood products, honey/malt/molasses products): 25% to 50% depending on good
- certain cosmetics (e.g., skincare products, perfumes): 50%
- certain plastics, plastic goods and polymers (e.g., wall or ceiling coverings, self-adhesive sheets, consumer goods such as tableware): 50%
- certain textiles/textile products (e.g., carpets, clothing): 25% to 50% depending on good
- certain hand tools and cutlery: 15% to 25% depending on good
- certain metal mountings and fittings (e.g., for furniture, doors, staircases, windows): 25%
- certain machinery and mechanical appliances (e.g., air/vacuum pumps, air conditioners, refrigerators/freezers, dishwashers, washing machines/dryers, other household appliances, cranes, fork-lift trucks, and parts, harvesting or threshing machinery, hydraulic/pneumatic hand tools): 15% to 50% depending on good
- certain electrical machinery and equipment (e.g., phone sets, monitors and projectors, and parts): 25% to 50% depending on good
- certain railway cars and service vehicles and parts: 25%
- certain light fixtures (e.g., LED lighting and parts): 50%
- certain toys and sporting equipment (e.g., golf clubs, exercise equipment, fishing rods and tackle, video game consoles): 50%
- motorcycles: 50%
U.S. section 338 tariffs
The Canadian goods subject to the U.S. section 338 tariffs include the following:
- wood and wood products (e.g., hardwood lumber, fiberboard, MDF, plywood, laminated lumber, veneered panels, chemical woodpulp, densified wood, paper, paperboard, doors and window frames, fencing, retail goods such as sports equipment, kitchen utensils and tableware), excluding softwood lumber and timber, which are subject to section 232 tariffs
- certain machinery and mechanical parts (e.g., hydraulic turbines, air compressors, refrigerating equipment, food processing machinery, A/V equipment)
- certain upholstered and non-upholstered seating
- certain textiles (e.g., yarn, woven polyester fabrics, non-woven man-made materials, knitted fabrics, and apparel goods)
- certain plastics and plastic articles (e.g., sheets, rolls, boxes and cates, snacks and bags for packaging
- certain alcoholic beverages
- certain toys and sporting equipment (e.g., gaming consoles, sporting equipment, exercise equipment, and pools)
- art and collectibles
- base and precious metal goods (e.g., tools, jewelry)
- paints, polymer varnishes
- certain cosmetics (e.g., lip and eye make-up and perfumes)
- certain foodstuffs (e.g., dairy, sugars, proteins), live plants and seeds, and animal products
The section 338 tariffs were imposed through three presidential proclamations, purportedly in response to Canada’s retaliatory measures relating to U.S. motor vehicles and alcoholic beverages, which themselves responded to previous U.S. tariffs, and Canadian dairy measures that the United States had litigated, with limited success, under the CUSMA. The full list of goods subject to the section 338 tariffs can be found in Annex I to each of the proclamations: Motor Vehicles Annex I [PDF], Alcohol Annex I [PDF] and Dairy Annex I [PDF].
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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