Order Amending the United States Surtax Remission Order (Motor Vehicles 2025): SI/2025-104

Canada Gazette, Part II, Volume 159, Number 23

Registration
SI/2025-104 November 5, 2025

CUSTOMS TARIFF

P.C. 2025-735 October 23, 2025

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, makes the annexed Order Amending the United States Surtax Remission Order (Motor Vehicles 2025) under section 115footnote a of the Customs Tariff footnote b.

Order Amending the United States Surtax Remission Order (Motor Vehicles 2025)

Amendment

1 Section 1 of the United States Surtax Remission Order (Motor Vehicles 2025) footnote 1 and the heading before it are replaced by the following:

Definitions

Definitions

1 The following definitions apply in this Order.

importer
means a person with a business number that is set out in column 1 of the schedule. (importateur)
schedule
means the schedule to this Order that has been approved by the Governor in Council but cannot be published for reasons of confidentiality. (annexe)

Coming into Force

2 This Order comes into force on the day on which it is made.

EXPLANATORY NOTE

(This note is not part of the orders.)

Issues

On April 15, 2025, the Government established a remission framework to provide domestic auto producers relief from Canada’s counter-tariffs on vehicles, contingent on continued production and investment in Canada. Following completion of the first quarterly review of the auto remission framework, quota volumes are to be adjusted where any company has decreased production in Canada from April to June 2025. The framework will also be amended to include companies that have invested in the Canadian automotive supply chain.

Background

Effective April 3, 2025, the U.S. global tariffs of 25% came into effect for imports of passenger vehicles and trucks. In the case of Canada, the tariffs apply to the full value of vehicles that do not meet the rules of origin under the Canada-United States-Mexico Agreement (CUSMA), but exclude the American content in vehicles that meet CUSMA rules of origin — i.e. for the latter, only that portion of the value of the vehicle added outside of the United States is subject to the tariff.

Effective April 9, 2025, Canada responded with reciprocal counter-tariffs of 25% against imports of passenger vehicles and certain trucks from the United States, further to the United States Surtax Order (Motor Vehicles 2025):

On April 15, 2025, the United States Surtax Remission Order (Motor Vehicles 2025) entered into force, which established a framework to provide relief of Canada’s 25% counter-tariffs on passenger vehicles and certain trucks that originate in the United States. To be eligible for remission, the vehicles must meet CUSMA rules of origin, be imported between April 9, 2025, and April 8, 2026, and the claim for remission must be made within two years from the date of importation.

The remission framework allows Canadian-based producers to import a certain quantity of U.S.-assembled vehicles tariff-free, provided they maintain Canadian-based production and investment. Specifically, the framework allows Canadian-based auto assemblers to import a specific quantity of CUSMA-compliant vehicles from the United States free of tariffs. As an incentive to maintain production in Canada, the tariff-free allowance will be adjusted based on the level of production in Canada. Remission has also been provided on the condition that, where companies have reduced or paused manufacturing because of factory retooling, production restarts in accordance with established timelines.

The auto remission framework includes a quarterly review to assess production levels and determine whether quota volumes should be amended. The first quarterly review began in early July 2025 and covered production from April through June 2025.

During the review period, one manufacturer decreased its Canadian production in Canada and, as a result, the tariff-free allowance for U.S.-made vehicles will be reduced for the applicable manufacturer in accordance with the remission framework. Following the review period, another manufacturer cancelled plans for future production at one of its facilities in Canada. The first quarterly review also provided an opportunity for the Government to assess the overall functioning of the framework, particularly whether the framework is achieving its objective of maintaining Canadian automotive production and investment. The assessment also recognized recent investment in the automotive supply chain in Canada.

The next quarterly review will assess production by Canadian automakers from July through September. Subsequent reviews will assess any changes to production that have been announced, or that will take place, following the period covered by this review.

In 2024, Canada exported $44.4 billion in finished vehicles to the United States, while importing $35.6 billion. The auto industry is a major employer in Canada, accounting for over 125 000 direct and 425 000 indirect jobs across the country. At the same time, Canada supports an estimated 75 000 direct jobs in the U.S. automotive manufacturing through motor vehicles and parts imports. Canada is the largest international market for the United States’ automotive industry, with more than 40% of the vehicles sold in Canada assembled in the United States. Meanwhile, 13% of vehicle imports into the United States are produced in Canada, with approximately half of the value coming from U.S. parts.

Objective

The objective is to lower the quantity of U.S.-assembled vehicles eligible for remission of tariffs for the applicable manufacturer as a result of a decrease in its level of vehicle production in Canada, and to provide remission that recognizes investments in the Canadian automotive supply chain.

Description

Pursuant to section 115 of the Customs Tariff, the Order Amending the United States Surtax Remission Order (Motor Vehicles 2025) amends the United States Surtax Remission Order (Motor Vehicles 2025) to clarify that an eligible importer is one that is identified in the schedule and the schedule is the one approved by the Governor in Council, but not published for reasons of confidentiality. The Order Replacing the Schedule to the United States Surtax Remission Order (Motor Vehicles 2025) adjusts the quantity of U.S.-assembled vehicles, where applicable, that companies may import duty-free and amends the companies eligible for remission.

The quantity of vehicles eligible for remission under the United States Surtax Remission Order (Motor Vehicles 2025) is contingent on Canadian-based auto assemblers maintaining certain levels of production in Canada during the period between April 9, 2025, to April 8, 2026. Given the level of Canadian-based vehicle production has fallen below this level for one manufacturer, the Government is amending the quantity of vehicles eligible for remission. For automakers that have reduced or paused manufacturing in Canada because of facility retooling, remission has also been provided on the condition that production resumes at the facility in accordance with established timelines. One Canadian automaker has announced plans to discontinue its retooling operations, resulting in changes to the company’s remission quota. The auto remission framework was also designed to promote continued investment in Canada’s auto sector. The list of companies eligible for remission is therefore being expanded in recognition of recent investment.

To protect business confidential information with competitiveness implications, the eligible manufacturers and the quantity of duty-free imports allocated to each manufacturer have been withheld from publication.

Regulatory development

Consultation

On March 4, 2025, Canada announced a public comment period with respect to the potential application of tariffs on a wide range of imports from the United States, including auto imports. From March 4 to April 2, 2025, Canada’s public comment period resulted in extensive stakeholder input and feedback, with nearly 7 000 written submissions.

On the motor vehicles subject to the United States Surtax Order (Motor Vehicles 2025), the Government received 131 submissions, most of them from vehicle importers and retailers concerned about consumer affordability and the viability of their businesses due to tariffs on American vehicles that they sell. Other groups voiced support for the need to have a strong retaliatory response to U.S. tariff actions.

Given the existential threat posed by U.S. tariffs for Canada’s automotive manufacturers, the Government has taken a measured and calibrated approach by implementing counter-tariffs to safeguard their space in the Canadian market, should a prolonged trade war unfold. The Government has also deployed a remission framework to minimize the adverse effects of the tariffs on Canadian auto producers, while incentivizing continued production and investment in Canada. Following the launch of the first quarterly review of the framework, the Government engaged with each manufacturer to gain a better understanding of domestic production over the review period, as well as future plans that may impact the Canadian manufacturing footprint.

Indigenous engagement, consultation and modern treaty obligations

Following an 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 orders.

Instrument choice

Section 115 of the Customs Tariff provides the authority for the Governor in Council to remit duties on the recommendation of the Minister of Finance. A remission order under section 115 of the Customs Tariff is the most appropriate mechanism, as it was created to provide remission from duties, including surtaxes.

Regulatory analysis

Benefits and costs

The auto remission framework was designed so that the quantity of vehicles eligible for remission could be adjusted in accordance with the level of Canadian production to ensure that Canadian auto producers reducing their Canadian production footprint see a corresponding decrease in vehicles eligible for remission. Decreasing remission quota volumes for companies that have reduced production may result in the applicable manufacturers paying tariffs on a greater number of vehicles imported from the United States, depending on when their quota threshold is reached. It may also impact the company’s planned import volumes for the remainder of the quota period (until April 8, 2026). However, reducing quota volumes in response to decreased Canadian production maintains the framework’s objective of incentivizing continued production in Canada.

Expanding the auto remission framework to recognize investments in the Canadian automotive supply chain upholds the framework’s objective of incentivizing continued production and investment in the domestic auto sector. The auto remission framework will continue to help relieve some of the financial burden of the tariff conflict on eligible producers by allowing their imports to Canada to enter duty-free. The scope of the framework’s application will also have the added benefit of lessening the affordability impacts for Canadian consumers arising from Canada’s counter-tariffs on U.S.-made autos.

Small business lens

Analysis under the small business lens determined that the measure would not impose administrative or compliance requirements on Canadian small businesses.

One-for-one rule

These orders relate to tax administration and are exempt from the requirement to offset administrative burden and regulatory titles under the one-for-one rule.

Regulatory cooperation and alignment

Canada continues to engage with the United States to assess its objectives behind the tariffs and advocate for an arrangement or resolution that upholds free trade on the North American continent. In this respect, on September 18, 2025, Canada and Mexico launched a new comprehensive strategic partnership to deepen bilateral ties and drive progress in strategic areas. More broadly, Canada is consulting and cooperating with U.S. trade partners affected by American 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 these orders.

Implementation, compliance and enforcement, and service standards

Amendments to the quantity of vehicles eligible for remission will be made based on the total quantity of duty-free imports allocated for the period covering April 9, 2025, to April 8, 2026, and will apply on a forward-looking basis. For companies that receive remission under this framework, to be eligible for remission, any vehicles must be CUSMA-originating, imported between April 9, 2025, and April 8, 2026, and the claim for remission must be made within two years from the date of importation.

The Canada Border Services Agency (CBSA) will assess any requests for remission made pursuant to the United States Surtax Remission Order (Motor Vehicles 2025) and will ensure compliance with its terms and conditions in the normal course of its administration of customs and tariff-related legislation and regulations. In doing so, the existing administrative framework will be leveraged to ensure that costs can be managed within existing resources. Any refund issued pursuant to the United States Surtax Remission Order (Motor Vehicles 2025) will be administered by the CBSA. Depending on the volumes and complexity of refund submissions, the CBSA strives to achieve a 90-day processing standard.

Contact

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