United States Surtax Remission Order (Motor Vehicles 2026): SI/2026-13

Canada Gazette, Part II, Volume 160, Number 7

Registration
SI/2026-13 April 8, 2026

CUSTOMS TARIFF

P.C. 2026-302 March 30, 2026

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, makes the annexed United States Surtax Remission Order (Motor Vehicles 2026) under section 115^{footnote a} of the Customs Tariff ^{footnote b}.

United States Surtax Remission Order (Motor Vehicles 2026)

Definitions

1 The following definitions apply in this Order.

importer

means a person that has a business number that is set out in column 1 of the schedule. (importateur)

schedule

means the schedule to this Order that appears in the version of this Order that is made by the Governor in Council but is not published for reasons of confidentiality. (annexe)

Remission granted

2 (1) Remission is granted to importers of surtaxes paid or payable under subsection 2(2) of the United States Surtax Order (Motor Vehicles 2025).

Number of motor vehicles

(2) The remission is granted in respect of the number of motor vehicles set out in column 2 of the schedule that corresponds with the business number of the importer that makes a claim for remission.

Conditions

3 The remission is granted on the following conditions:

• (a) the motor vehicle is imported on or after April 9, 2026 and not later than April 8, 2027;
• (b) the importer makes a claim for remission to the Minister of Public Safety and Emergency Preparedness within two years after the date of importation;
• (c) the importer provides the Minister and the Minister of Industry with any information that may be requested by either Minister respecting the importing into Canada and sale in Canada of motor vehicles manufactured in the United States;
• (d) the importer also provides the Minister and the Minister of Industry with any information that may be requested by either Minister respecting the manufacture of motor vehicles in Canada and the goods that originate in Canada that are used in the manufacture of those motor vehicles;
• (e) in the case of an importer that has reduced or paused its manufacturing of motor vehicles in Canada because of factory retooling, the importer restarts manufacturing in Canada in accordance with the requirements established by the Minister and the Minister of Industry;
• (f) in the case of an importer that is not a manufacturer of motor vehicles in Canada on the day on which this Order comes into force, the importer has begun manufacturing goods in Canada in accordance with the requirements established by the Minister and the Minister of Industry; and
• (g) no other claim for relief of the surtax has been granted under the Customs Tariff in respect of the motor vehicle.

Coming into force

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

EXPLANATORY NOTE

(This note is not part of the Order.)

Issues

On April 15, 2025, the Government established a remission framework to provide eligible automakers relief from Canada’s counter-tariffs on vehicles, contingent on continued production and investment in Canada. Remission was provided for vehicles compliant with the Canada-United States-Mexico Agreement (CUSMA) that were imported on or after April 9, 2025, and not later than April 8, 2026. The United States Surtax Remission Order (Motor Vehicles 2026) will renew remission for eligible automakers for an additional year, from April 9, 2026, to April 8, 2027.

Background

In 2024, Canada exported $44.4 billion in finished vehicles to the United States (U.S.), 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. Canada is the largest international market for the U.S. 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.

On April 3, 2025, U.S. tariffs of 25% came into effect for all imports of passenger vehicles and light trucks. In the case of Canada, tariffs exclude the U.S. content in vehicles that are CUSMA-compliant. Effective April 9, 2025, Canada responded with reciprocal counter-tariffs of 25% against imports of passenger vehicles and light trucks from the United States, further to the United States Surtax Order (Motor Vehicles 2025):

• For U.S. motor vehicles that are not CUSMA-compliant, counter-tariffs are 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 counter-tariffs apply in addition to any applicable customs duties imposed under the Customs Tariff.
• For U.S. motor vehicles that are CUSMA-compliant, counter-tariffs do not apply to that portion of the value for duty representing parts used in the production of the vehicle that are themselves originating in Canada or Mexico, in accordance with the same regulations noted above. The value of Canadian and Mexican content in a U.S. motor vehicle is assumed to be 15%, unless an importer provides evidence of a higher amount.

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 U.S. passenger vehicles and light trucks. Specifically, the framework allowed automakers to import a specific quantity of CUSMA-compliant vehicles from the United States free of Canada’s counter-tariffs. This remission is contingent on automakers maintaining production levels in Canada. Remission was also provided on the condition that, where companies have reduced or paused manufacturing because of factory retooling, production restarts in accordance with established timelines.

Objective

The objective is to extend relief from Canada’s counter-tariffs on passenger vehicles and certain trucks for eligible automakers, in recognition of the integrated nature of the North American automotive industry, while promoting continued automotive production and investment in Canada.

Description

The Order renews the automotive remission framework for a second year, allowing eligible automakers to import a set number of CUSMA-compliant vehicles free of Canada’s counter-tariffs, provided they maintain production and investment in Canada. The quantity of vehicles eligible for remission is contingent on automakers maintaining certain levels of production in Canada during the period between April 9, 2026, to April 8, 2027, and proceeding with announced investments.

To protect confidential business 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 counter-tariffs on a wide range of imports from the United States, including automotive 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 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 counter-tariffs on U.S. vehicles that they sell. Other groups voiced support for the need to have a strong retaliatory response to U.S. tariff actions.

During the first year of relief provided under the United States Surtax Remission Order (Motor Vehicles 2025), the Government regularly engaged with each manufacturer to gain a better understanding of domestic production, pressures facing the industry, as well as future plans that may impact the Canadian manufacturing footprint.

The Government has also launched public consultations on how the automotive remission framework can be leveraged more strategically to reinforce domestic production, attract new investment, and enhance the long-term competitiveness of Canada’s automotive sector. Comments can be submitted until April 13, 2026. The results of these consultations may inform future changes to the remission framework.

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 Order.

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 automotive duty remission framework was designed so that the quantity of vehicles eligible for remission could be adjusted in accordance with the level of Canadian production. By striking a balance between penalizing a decrease of production and rewarding strong performance in Canada, the remission framework provides an important incentive to encourage companies to maintain their manufacturing base in Canada in a changing trade environment.

Renewal of the remission framework will continue to help relieve some of the financial burden of Canada’s counter-tariffs for eligible producers by allowing a certain volume of CUSMA-compliant vehicles to Canada to enter duty-free. Continuing to provide remission to a set volume of imports will also help address concerns with respect to vehicle availability and affordability.

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

This Order relates to tax administration and is 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 U.S. tariff actions.

Canada continues to pursue its trade diversification strategy to promote new investments and grow Canada’s economy. In November 2025, the Government tabled notices of intent to enter into negotiations with the Philippines, the United Arab Emirates, Thailand and India. Canada has also recently concluded public consultations on the resumption of Free Trade Agreement (FTA) negotiations between Canada and Mercosur countries (Argentina, Brazil, Paraguay and Uruguay).

Effects on the environment

In accordance with the Cabinet Directive on Strategic Environmental and Economic Assessment, 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

For companies that receive remission under this framework, to be eligible for remission, any vehicles must be CUSMA-compliant, imported between April 9, 2026, and April 8, 2027, 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 2026) 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 2026) 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