10% U.S. Section 301 Tariff on Canada Takes Effect
Canadian goods that qualify for duty-free treatment under CUSMA remain exempt.
New U.S. Section 301 tariffs on goods from 60 economies take effect July 24 under a new presidential action, including a 10% additional tariff on certain Canadian goods entering the United States.
The tariffs follow investigations launched by the Office of the United States Trade Representative (USTR) in March into each economy's policies and practices regarding the prohibition of imports of goods produced with forced labour.
USTR proposed the tariffs in June and received more than 1,600 written comments before holding public hearings on July 7, 8 and 9.
The final action sets different tariff rates and treatment across the 60 economies covered by the investigations.
Seventeen economies, including Canada, Mexico, the United Kingdom, India, Argentina, and Indonesia, will face a 10% Section 301 tariff.
Goods from most of the remaining economies will face a 12.5% Section 301 tariff.
Different treatment applies to the European Union, Taiwan, Japan, South Korea, and Switzerland. For the EU and Taiwan, the Section 301 tariff will bring the combined Most-Favoured-Nation (MFN) and Section 301 rate to 10% where the existing MFN rate is below that level. For Japan, South Korea, and Switzerland, the corresponding combined rate is 12.5%.
For Canada, the additional Section 301 tariff is 10%, but Canadian goods that qualify under CUSMA are exempt.
Canadian goods that do not qualify for CUSMA treatment may therefore face the additional tariff unless another exemption applies.
The tariff applies to covered goods entered for consumption, or withdrawn from warehouse for consumption, at or after 12:01 a.m. ET on July 24.
A limited in-transit exception applies to goods loaded onto a vessel at the port of loading and already in transit on the final mode of transit before that time, provided they are entered for consumption or withdrawn from warehouse for consumption before 12:01 a.m. ET on July 28.
The final action exempts several categories of goods from the additional Section 301 tariffs.
These include raw materials where additional tariffs could lead to unavailable domestic supply, products that could cause economy-wide disruptions, and products that cannot be grown or produced in sufficient quantities in the United States or obtained from other sources.
Certain products are also exempt where USTR determined that the tariffs may not be effective in addressing the practices identified in the investigations.
Product-specific exemptions also apply to certain goods from 13 economies, including Argentina, the European Union, Indonesia, Switzerland, Taiwan, and the United Kingdom, to encourage commitments related to the issues addressed by the investigations.
Cole International offers trade consulting and customs brokerage services to help Canadian businesses understand U.S. tariff requirements and applicable exemptions.
If you export goods from Canada to the United States, reach out to one of our trade professionals to discuss how the new Section 301 tariff may affect your business.