As many Canadian importers know, as of July 1, Canada is applying a surtax to many goods of U.S. origin that were previously duty-free. This was done as a countermeasure to the U.S. adding tariffs to many Canadian products earlier this year.
This so-called “retaliatory surtax” adds 25% to U.S.-origin steel products and 10% to U.S.-origin aluminum products as well as numerous consumer-based products.
(Note that under the tentative NAFTA-replacement agreement – the United States-Mexico-Canada Agreement (USMCA) – steel and aluminum tariffs remain in place… for the time being, at least.)
Importers into Canada – including non-resident importers – should be aware of these added costs and prepare accordingly. Businesses that are accustomed to importing duty-free items need to take extra care to ensure they know whether this surtax applies to any of their imports.
Importers should be paying special attention to the following areas when documenting and declaring their goods.
1. Country of Origin
It’s more important than ever to ensure the declared Country of Origin is correct. Just because you've received shipment from a U.S. source doesn't necessarily mean the U.S. is the Country of Origin. If you’re unsure, confirm with your suppliers and request supporting information – bill of materials, country of export documentation, etc. – about the products.
2. Tariff classification
With customs surcharges in flux, it’s also extra important to review the tariff classifications of your imports to ensure accuracy. In some cases, importers may want to secure a binding ruling to have certainty that customs charges will be predictable for repeated imports of the same item.
Review your valuation declarations and paperwork to ensure the declared value is correct. If your review results in ascribing a lower value to your goods, you’ll owe less duty and less surtax.
Looking for relief from added surtaxes and duties? In certain cases, duty refunds and exemptions may be available.
If you import materials and use those materials to manufacture goods that are then exported outside of Canada, you may be eligible for a duty refund. Likewise if you import goods and then export them in the same condition.
In certain cases, importers may be eligible for an exemption from the new surtaxes. Instances where this may apply include cases where: you cannot source the product in Canada, there are insufficient quantities of the product in Canada or you had a contract in place for the purchase of the products prior to May 31, 2018.
Speak to your customs broker for more information on the new surtax, questions about duty relief or to get help with a customs compliance review. And, as always, our experienced brokers here to help, too.
Information provided by: Canadian Customs Consulting Dept. - Cole International