United States Surtax Order (Steel and Aluminum 2025): SOR/2025-95

Canada Gazette, Part II, Volume 159, Number 7

Registration
SOR/2025-95 March 12, 2025

CUSTOMS TARIFF

P.C. 2025-398 March 12, 2025

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance and the Minister of Foreign Affairs, makes the annexed United States Surtax Order (Steel and Aluminum 2025) under subsection 53(2)footnote a and paragraph 79(a)footnote b of the Customs Tariff footnote c.

United States Surtax Order (Steel and Aluminum 2025)

Surtax

25% surtax

1 (1) Subject to section 2, goods that originate in the United States that are classified under any of the tariff items set out in Schedule 1, 2 or 3 are subject to a surtax in the amount of 25% of the value for duty determined in accordance with sections 47 to 55 of the Customs Act.

Goods that originate in the United States

(2) For the purposes of subsection (1), goods originate in the United States if they are eligible to be marked as goods of the United States in accordance with the Determination of Country of Origin for the Purpose of Marking Goods (CUSMA Countries) Regulations.

Exceptions

2 The following goods are not subject to the surtax:

Coming into Force

March 13, 2025

3 This Order comes into force on March 13, 2025, but if it is registered after that day, it comes into force on the day on which it is registered.

SCHEDULE 1

(Subsection 1(1) and paragraph 2(a))

Goods Subject to Surtax — Aluminum and Other Goods

SCHEDULE 2

(Subsection 1(1))

Goods Subject to Surtax — Steel

SCHEDULE 3

(Subsection 1(1) and paragraph 2(a))

Goods Subject to Surtax — Chapters 98 and 99

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Order.)

Issue

On February 10, 2025, the United States (U.S.) issued two Proclamations to amend Section 232 tariffs, initially imposed in 2018, which subject Canadian steel and aluminum exports to 25 per cent tariffs, effective March 12, 2025. In response to these measures, Canada announced its intention to impose reciprocal surtaxes of 25 per cent against up to $29.8 billion in imports of steel, aluminum, and other products from the U.S.

Background

In 2018, the President of the U.S. imposed tariffs on 25 per cent on imports of steel and 10 per cent on imports of aluminum under Section 232 of the U.S. Trade Expansion Act of 1962 following a determination that they were threatening to impair U.S. national security. However, a number of countries, including Canada, later secured agreements with the U.S. providing various levels of exceptions. U.S. tariffs against Canada were subsequently suspended in May 2019 when Canada and the U.S. signed a Joint Statement on Section 232 Duties on Steel and Aluminum. Under the Joint Statement, Canada and the U.S. agreed to establish a process to monitor steel and aluminum trade between them and only impose tariffs: (1) after consultations with the other party, and (2) where imports of specific goods have surged meaningfully beyond historical volumes.

On February 10, 2025, President Trump issued two proclamations amending Section 232 tariffs for both steel and aluminum in several ways, effective March 12, 2025. Key elements of the Proclamations include:

Section 232 duties would apply on top of any other applicable duties.

Canada continues to advocate for a full and permanent exemption from the U.S. tariffs.

Both the Canadian steel and aluminum industries are part of an integrated North American manufacturing structure. Canada is the number one supplier of steel and aluminum products to the U.S. In 2024, Canadian exports to the U.S. that would be covered by the tariffs applicable on March 12, totalled $15.4 billion for steel products, and $14.4 billion for aluminum products.

The steel industry directly supports 23,400 jobs and contributes $4.4 billion to gross domestic product annually. The industry serves as a hub for other manufacturing activities and supports upstream and downstream industries that reinforce local and regional economies.

The aluminum industry directly employs over 11,000 Canadians and supports over 20,000 jobs in the processing industry in Canada. In 2024, it contributed $4.1 billion to the gross domestic product.

Section 53 of the Customs Tariff provides for the ability to apply trade measures, including surtaxes, to respond to acts, policies or practices of other countries’ governments that adversely affect, or lead directly or indirectly to adverse effects on, trade in goods or services of Canada.

Objective

The objective of the surtaxes is to encourage a prompt end to U.S. tariffs on Canadian steel and aluminum exports to the U.S., which significantly impact Canada’s steel and aluminum industries.

Description

Pursuant to section 53 of the Customs Tariff, the United States Surtax Order (Steel and Aluminum 2025) establishes reciprocal surtaxes of 25 per cent on $29.8 billion in imports from the U.S. of steel, aluminum and other products, based on 2024 trade figures.

Any applicable surtaxes will be calculated on the basis of the value for duty of the imported goods, as determined in accordance with sections 47 to 55 of the Customs Act. These surtaxes will apply in addition to any applicable customs duty imposed under the Customs Tariff.

With the exception of steel goods, the surtaxes do not apply to goods classified under Chapters 98 and 99 of the Schedule to the Customs Tariff, even if the goods are classified in a tariff item subject to the surtax, whereas surtaxes will apply to steel goods classified under these chapters. The exception of steel goods reflects the particular structure of the steel industry in Canada, and ensures that steel users have strong incentives to use Canadian steel products, other than in exceptional circumstances. Chapter 98 waives customs duties on certain non-commercial importations such as travelers’ exemptions, while Chapter 99 waives custom duties on certain commercial importations such as goods for specific uses (e.g., religious goods) and in select situations to assist a small number of complex manufacturing activities.

The surtaxes will only apply to the relevant goods originating in the U.S., which shall be considered as those goods eligible to be marked as goods of the U.S. in accordance with the Determination of Country of Origin for the Purpose of Marking Goods (CUSMA Countries) Regulations. The surtaxes will not apply to those U.S. goods that are already in transit to Canada on or before the date that this Order enters into force.

The Government is conscious that there may be a need for temporary relief for importers in exceptional circumstances. That is why it has put in place a framework for considering requests for relief of tariffs. This remission framework is published on the Department of Finance website and establishes a process by which businesses may seek exceptional relief from Canadian tariffs. This process will be available to importers of goods subject to this surtax.

The surtaxes will remain in place until the U.S. eliminates its tariffs against Canada.

Regulatory development

Consultation

The Government has already put in place surtaxes on $30 billion worth of imports from the U.S., and announced its intention to put a surtax on an additional $125 billion in imports by April 2, 2025, should the U.S. not remove its tariffs on Canada. Canada is currently seeking comments concerning goods that would comprise the $125 billion in imports, including steel and aluminum goods. In this context, there has already been significant outreach from Canadian businesses. Canadian steel and aluminum producers generally support responsive tariffs on steel and aluminum imports into Canada, while some Canadian manufacturers and importers have expressed concern with their ability to source products from non-U.S. jurisdictions, should a surtax be applied.

To minimize any adverse effects stemming from the United States Surtax Order (Steel and Aluminum 2025), as well as any future trade actions, the Government has established a remission process to consider requests for relief from surtaxes. The remission policy addresses exceptional and compelling circumstances that, from a public policy perspective, are found to outweigh the primary rationale behind the application of the surtaxes. Remission will ensure that Canadian importers, workers and businesses are not unduly burdened by the surtaxes. Further details on the remission process can be found here: Process for requesting remission of tariffs that apply on certain goods from the U.S. - Canada.ca.

Modern treaty obligations and Indigenous engagement and consultation

Following the completion of the assessment of modern treaty implications, no adverse impacts on potential or established Indigenous or treaty rights, which are recognized and affirmed in section 35 of the Constitution Act, 1982, were identified in the Order.

Instrument choice

Subsection 53(2) of the Customs Tariff provides the authority for the Governor in Council, on the recommendation of the Minister of Finance and the Minister of Foreign Affairs, by Order, to make goods that originate in any country subject to a surtax for the purpose of responding to acts, policies or practices of a country that adversely affect, or lead directly or indirectly to adverse effects on, trade in goods or services of Canada.

Other instruments were considered but were found unsuitable in terms of effectively addressing the impact of U.S. tariffs in a timely manner.

Regulatory analysis

Benefits and costs

The surtaxes represent Canada’s response to the unwarranted, unilateral tariff actions by the U.S., which contravene CUSMA’s liberalized trade regime, limit Canada’s market access, and threaten the integrity of North American supply chains.

Canada’s countermeasure signals its resolute intent to force a prompt end to the U.S. tariffs. Canada’s response to the U.S.’ steel and aluminum tariffs will encourage the removal of U.S. tariffs to protect Canadian industries and their integrated supply chains.

Should the U.S. eliminate or suspend its tariffs against Canada, Canada’s trade measures would be repealed or suspended, respectively.

This Order targets $29.8 billion in U.S. imports of steel, aluminum and other goods to Canada, with reciprocal surtaxes of 25 per cent. This will help to preserve the Canadian market for Canadian producers harmed by U.S. tariffs, which have limited access to the U.S. market.

In certain cases, the surtaxes will increase the costs of goods, including inputs used by various industries in Canada. Some importers may pass the incremental importation costs onto their Canadian clients, increasing the costs for downstream manufacturers reliant on American inputs, while others may be able to more rapidly secure these products domestically, or from other markets not subject to the surtaxes.

Small business lens

Analysis under the small business lens determined that the measure would not impose administrative or compliance requirements on Canadian small businesses. Taxes (including surtaxes) are not included in the definitions of administrative and compliance burden in the Policy on Limiting Regulatory Burden on Business.

One-for-one rule

The one-for-one rule does not apply, as there is no incremental change in administrative burden on businesses. Duties and taxes (including surtaxes) do not meet the definition of administrative burden in the Red Tape Reduction Act and are not subject to the offset requirement under the rule.

Regulatory cooperation and alignment

Canada has been forced to respond to the U.S. tariffs with its own countermeasures, but it will engage as needed with other international partners who may be affected by U.S. tariff actions.

Effects on the environment

In accordance with the Cabinet Directive on Strategic Environmental and Economic Assessment (SEEA Directive), a preliminary scan concluded that a SEEA is not required.

Gender-based analysis plus

No impacts based on gender and other identity factors have been identified for this proposal.

Implementation, compliance and enforcement, and service standards

The CBSA is responsible for administering Customs Tariff legislation and regulations, including this Order. Once the Order enters into force on March 13, 2025, the CBSA will publish a Customs Notice to inform the importing community of issues related to the administration of the surtaxes.

The surtaxes will remain in place until the U.S. eliminates its tariffs against Canada. They will not apply to U.S. goods that are in transit to Canada on the day on which these countermeasures come into force.

Contact

Mike Mosier
Director, Trade and Tariff Policy
International Trade Policy Division
Department of Finance
Ottawa, Ontario
K1A 0G5
tariff-tarif@fin.gc.ca