Order Amending and Repealing Certain Orders Made Under the Customs Tariff (United States Surtax): SOR/2025-181

Canada Gazette, Part II, Volume 159, Number 19

Registration
SOR/2025-181 August 29, 2025

CUSTOMS TARIFF

P.C. 2025-637 August 29, 2025

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance and the Minister of State (U.S. Trade), makes the annexed Order Amending and Repealing Certain Orders Made Under the Customs Tariff (United States Surtax) under subsections 53(2)footnote a and (3.1)footnote b of the Customs Tariff footnote c.

Order Amending and Repealing Certain Orders Made Under the Customs Tariff (United States Surtax)

United States Surtax Order (2025-1)

1 (1) Subsection 3(1) of the United States Surtax Order (2025-1) footnote 1 is replaced by the following:

Surtax — tariff items set out in Schedule 1

3 (1) Subject to subsection (2), the following goods that originate in the United States 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:

(2) Paragraph 3(2)(b) of the Order is replaced by the following:

2 The schedule to the Order is numbered as Schedule 1.

3 Schedule 1 to the Order is amended by repealing the following:

4 The Order is amended by adding, after Schedule 1, the Schedule 2 set out in Schedule 1 to this Order.

5 The Order is repealed.

United States Surtax Order (Steel and Aluminum 2025)

6 Subsection 1(1) of the United States Surtax Order (Steel and Aluminum 2025) footnote 2 is replaced by the following:

25% surtax

1 (1) Subject to section 2, the following goods that originate in the United States 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:

7 Paragraph 2(a) of the Order is replaced by the following:

8 Schedule 1 to the Order is amended by replacing the references after the heading “SCHEDULE 1” with the following:

(Paragraphs 1(1)(a) and (b) and 2(a))

9 Schedule 1 to the Order is replaced by the Schedule 1 set out in Schedule 2 to this Order.

10 Schedule 2 to the Order is amended by replacing the reference after the heading “SCHEDULE 2” with the following:

(Paragraphs 1(1)(a) and (c) and 2(a.1))

11 Schedule 3 to the Order is amended by replacing the references after the heading “SCHEDULE 3” with the following:

(Paragraphs 1(1)(b) and 2(a))

12 Schedule 3 to the Order is amended by repealing the following:

13 The Order is amended by adding, after Schedule 3, the Schedule 4 set out in Schedule 3 to this Order.

United States Surtax Order (Motor Vehicles 2025)

14 Section 1 of the United States Surtax Order (Motor Vehicles 2025) footnote 3 is replaced by the following:

Definition of motor vehicle

1 In this Order, motor vehicle means

15 Section 3 of the Order is amended by striking out “and” at the end of paragraph (a) and by adding the following after that paragraph:

16 Schedule 1 to the Order is amended by replacing the references after the heading “SCHEDULE 1” with the following:

(Section 1)

17 Schedule 2 to the Order is amended by replacing the reference after the heading “SCHEDULE 2” with the following:

(Paragraphs 1(b) and 3(a))

18 Schedule 2 to the Order is amended by repealing the following:

Coming into Force

19 (1) Subject to subsections (2) to (4), this Order comes into force on September 1, 2025, but if it is registered after that day, it comes into force on the day on which it is registered.

(2) Sections 1 to 4 are deemed to have come into force on March 4, 2025, immediately after the coming into force of the United States Surtax Order (2025-1).

(3) Sections 6 to 8 and 10 to 13 are deemed to have come into force on March 13, 2025, immediately after the coming into force of the United States Surtax Order (Steel and Aluminum 2025).

(4) Sections 14 to 18 are deemed to have come into force on April 9, 2025, immediately after the coming into force of the United States Surtax Order (Motor Vehicles 2025).

SCHEDULE 1

(Section 4)

SCHEDULE 2

(Paragraphs 3(1)(b) and (2)(b))

Tariff Items — Chapters 98 and 99

SCHEDULE 2

(Section 9)

SCHEDULE 1

(Paragraphs 1(1)(a) and (b) and 2(a))

Goods Subject to Surtax — Aluminum

SCHEDULE 3

(Section 13)

SCHEDULE 4

(Paragraphs 1(1)(c) and 2(a.1))

Tariff Items — Chapters 98 and 99

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Order.)

Issues

The United States continues to provide the majority of Canadian exports with a Canada-United States-Mexico Agreement (CUSMA) based exemption from its tariffs under the International Emergency Economic Powers Act (IEEPA). To preserve this advantage and reaffirm duty-free trade for the majority of goods under CUSMA, Canada is removing its tariffs under the United States Surtax Order (2025-1) and amending the United States Surtax Order (Steel and Aluminum 2025) to remove tariffs on non-steel and non-aluminum goods starting on September 1, 2025. Canada is also making small technical adjustments to counter-tariffs on United States (U.S.) goods.

Background

On February 1, 2025, the Trump administration announced the imposition of 25% tariffs against imports of all Canadian goods under the IEEPA. After a period of delay leading to March 4, the United States imposed 25% horizontal tariffs on Canadian exports (with 10% tariffs on Canadian energy products). On March 7, these tariffs were narrowed to exclude goods compliant with the CUSMA rules of origin. The United States affirmed this exemption on July 31, 2025. The exemption allows more than 85% of Canada’s total exports to the United States tariff free.

In response, Canada imposed 25% tariffs against an original $30.3 billion worth of annually imported consumer and household goods under the United States Surtax Order (2025-1) on March 4 and announced a public comment period on potential additional tariff measures. The comment period closed on April 2.

Separately, effective March 12, the United States amended section 232 global steel and aluminum tariffs to remove all previous exclusions, including for Canada, and to set the tariffs at 25% for both steel and aluminum goods. These tariffs were subsequently increased to 50% on June 4. Canada responded with counter-tariffs under the United States Surtax Order (Steel and Aluminum 2025), which came into force on March 13. Under this Order, Canada imposed tariffs of 25% on imports from the United States of steel and aluminum goods, totalling $15.6 billion in annual imports, as well as other consumer products totalling $14.4 billion.

On April 3, the United States imposed section 232 global tariffs of 25% on imports of passenger vehicles. In the case of Canada (and Mexico), the tariffs apply in full to non-CUSMA originating vehicles, but apply only to the non-U.S. content of CUSMA originating vehicles. In response, on April 9, Canada imposed 25% tariffs on non-CUSMA compliant passenger vehicles from the United States and 25% tariffs on the non-Canadian and non-Mexican content of CUSMA compliant vehicles under the United States Surtax Order (Motor Vehicles 2025). For passenger vehicles and trucks, the scope of the Canadian counter tariffs generally aligns with the scope of the U.S. tariffs on Canadian vehicles, with the notable exception of heavy electric trucks, which are classified with light electric trucks in Canada’s Customs Tariff, and vintage vehicles. Although the United States implemented section 232 global tariffs of 25% on auto parts, Canadian parts are exempt provided they are CUSMA-compliant.

On March 4, the Government announced a framework and process to consider remission requests for the tariffs on products from the United States. Under specific circumstances, remission allows for relief from the payment of tariffs, or the refund of tariffs already paid. Remission represents an exception to the rules by providing for relief of otherwise applicable duties. Therefore, the Government only considers remission where it is required to address exceptional and compelling circumstances that, from a public policy perspective, are found to outweigh the primary rationale behind the application of the tariffs.

On April 16, 2025, Canada implemented the United States Surtax Remission Order (2025), which provides temporary, horizontal relief for any goods imported by or on behalf of public health, health care, public safety or national-security entities, as well as certain goods deemed necessary for public health and health care. It also provides relief for any goods used as inputs in Canadian manufacturing, processing or food and beverage packaging. Remission under this Order expires on October 16, 2025. The Order was amended on June 26 to provide additional relief from tariffs for certain goods found to be in short supply and for companies facing exceptional circumstances.

Throughout the tariff crisis, Canada has engaged the United States in a transparent and focused manner to advocate for a new trade and security arrangement based on safeguarding North American integration and the free flow of goods. These discussions are continuing.

Objective

The objective of repealing tariffs on certain consumer goods is to reaffirm the importance of CUSMA as a duty-free regime, to safeguard North America’s integrated supply chains and industries, and to alleviate pressure on Canadian consumers of these imported U.S. goods.

Description

Pursuant to section 53 of the Customs Tariff, the Order Amending and Repealing Certain Orders Made Under the Customs Tariff (United States Surtax) [the Order] removes tariffs on the full set of goods ($30.3 billion in annual imports from the United States) listed under the United States Surtax Order (2025-1), as well as all of the non-steel and non-aluminum goods ($14.4 billion in annual imports) listed under the United States Surtax Order (Steel and Aluminum 2025), from September 1, 2025, onwards.

The Order also makes certain technical amendments to Canada’s surtax orders to their original coming-into-force dates. It amends the United States Surtax Order (Motor Vehicles 2025) to exclude heavy electric trucks (i.e. those with a gross vehicle weight over five tonnes) and vintage vehicles so that surtaxes will not apply to those goods. This change aligns the scope of that Order with the tariffs applied by the United States on Canadian vehicles. These changes will apply retroactively, meaning that importers that previously paid U.S. surtax duties on those goods may apply to the Canada Border Services Agency (CBSA) for a refund.

The United States Surtax Order (Steel and Aluminum 2025) is amended to ensure that reusable steel containers, such as canisters and racks for automotive parts, are not subject to the surtax when imported temporarily into Canada. This ensures that Canadian manufacturers are not unduly affected by the Canadian counter tariffs, while preserving their policy intent. These changes are also applied retroactively, meaning that importers that previously paid U.S. surtax duties on those goods may apply to the CBSA for a refund.

In addition, all three of Canada’s United States surtax orders are amended retroactively to clarify the application of relief mechanisms classified in Chapters 98 or 99. Clarifying how the surtaxes are applied to goods classified under a tariff item of Chapters 98 and 99 will help ensure that these relieving measures will not result in tariffs being applied on goods that are not otherwise targeted by the surtax orders.

Regulatory development

Consultation

Given the gravity of U.S. tariff actions and the need to ensure immediate, robust, and measured responses in real time, the Government previously imposed counter-tariffs under the United States Surtax Order (2025-1), the United States Surtax Order (Steel and Aluminum 2025), and the United States Surtax Order (Motor Vehicles 2025). The non-steel, non-aluminum goods and non-automotive goods under these orders were selected to avoid as much as possible targeting manufacturing inputs or consumer products without viable alternative sources of supply.

At the same time, Canada’s public comment period generated extensive stakeholder input and feedback, with nearly 7 000 written submissions that the Government continues to assess and take into consideration. While Canadian businesses, stakeholders, and partners generally understood the rationale for Canada’s tariffs on U.S. goods, there were also many stakeholders who identified concerns with tariffs being applied on specific goods, including consumer and household products.

After the Prime Minister’s announcement of Canada’s plan to repeal certain U.S. surtaxes, stakeholders’ reactions have been broadly positive, as importers of U.S. goods will no longer face the additional cost of the surtax, with some noting this will help alleviate upward pressure on the price of goods sold in Canada. Reaction from the steel industry noted the importance of Canada’s decision to maintain steel tariffs in response to the U.S. ones, which do not benefit from a CUSMA-compliance carve-out, but expressed disappointment that Canada did not strengthen its response to steel tariffs. Reaction from other industries on which tariffs were not removed (autos and aluminum) was more muted.

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.

Certain powers, duties and functions of the Minister of Foreign Affairs under subsection 53(2) of the Customs Tariff were transferred to the Minister of International Trade by the Order Transferring from the Minister of Foreign Affairs to the Minister for International Trade the Powers, Duties and Functions Under Subsection 53(2) of the Customs Tariff and then to the Minister of State (US Trade) in relation to Canada-U.S. trade by the Order Transferring from the Minister for International Trade to the Minister of State (US Trade) and the Minister of Foreign Affairs the Powers, Duties and Functions Under Subsection 53(2) of the Customs Tariff.

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

Regulatory analysis

Benefits and costs

The removal of Canada’s tariffs on all non-steel, non-aluminum and non-automotive goods reaffirms and helps to preserve the benefits of CUSMA’s duty-free regime for Canada-United States bilateral trade. This matches and reinforces the U.S. approach that continues to provide duty-free market access for the majority of Canada’s exports, a significant competitive advantage when considering that other major trading partners are restricted by high tariffs, for example, 15% on most European and Japanese goods. Owing to the CUSMA exemption, the actual U.S. average tariff rate on Canadian goods is 5.6%.

The arrangement supports and protects interconnected supply chains in North America, avoiding negative cumulative and knock-on effects for importers, exporters, producers, manufacturers, processors, distributors, retailers, workers and consumers. Relief through CUSMA staves off indiscriminate U.S. tariffs of 35% against most Canadian goods, which would otherwise threaten the integrity of Canada’s supply chains in North America, fuel uncertainty and imperil our economy. In the context of ongoing trade discussions and the upcoming CUSMA trilateral review, tariff removal signals a clear commitment to CUSMA’s core principles and its foundational role in resolving trade issues.

At the same time, providing an avenue to duty-free market access for $44.7 billion in annual imports from the United States, most of which are final consumer and household goods, will help to avoid longer-term cost increases due to tariffs and reduce overall pressure on consumer prices. For such goods that may be seeking tariff relief through the remission process, a forward-looking elimination of surtaxes provides the most simplified, cost-efficient and predictable route to duty-free importation. It also relieves direct pressure on the remission process so that it can more easily focus on minimizing any unintended, adverse effects stemming from tariffs remaining on key sector-specific goods.

The other technical changes to the United States surtax orders also limit undue impacts on Canadians and ensure a balanced approach. The exemption from surtaxes for heavy electric trucks and vintage vehicles matches the scope of the U.S. tariffs on automobiles. This will ensure that importers of these goods are not impacted by surtaxes. The amendment to allow for the surtax-free temporary importation of steel containers will help ensure that manufacturers using these items to transport the goods they produce do not face increased costs as a result of the Canadian responsive tariff measures. Finally, clarifying how the surtax is applied to goods classified under a tariff item of Chapters 98 and 99 will help ensure that these relieving measures will not result in tariffs being applied on goods that are not otherwise targeted by the surtax orders.

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 strategic environmental and economic assessment is not required.

Gender-based analysis plus

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

Implementation, compliance and enforcement, and service standards

The CBSA is responsible for administering Customs Tariff legislation and regulations, including the Order Amending and Repealing Certain Orders Made Under the Customs Tariff (United States Surtax) that comes into force on September 1, 2025.

Once the Order is published, the CBSA will release a Customs Notice to inform the importing community of issues related to the administration of the tariffs, including the retroactive application of certain technical changes.

Contact

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