The U.S. Raises The Import Tariff on Canada to 35%

Goods that are transshipped to avoid this tariff will face a 40% duty rate, may incur fines or penalties, and will be subject to other duties, fees, taxes, or charges.

The U.S. has announced raising its import tariff on Canada to 35%, effective August 1, 2025.

According to an amended Executive Order (EO) published by the White House on July 31, 2025, the additional ad valorem rate of duty on Canadian imports will increase from 25% to 35% to deal with the emergency declared in EO 14193.

This tariff rate may be raised and its scope expanded if Canada imposes reciprocal tariffs or takes additional measures.

The 35% duty rate applies to all goods entered for consumption, or withdrawn from a warehouse for consumption, on or after 12:01 a.m. EDT on August 1, 2025.

Stacking rules set by IEEPA tariffs shall also continue to apply.

Products that meet USMCA rules of origin under an existing exemption will continue to enter the U.S. free of duty, while Canadian energy and potash remain subject to the reduced 10% tariff announced earlier this year. 

The new duty rate may cause changes to the Harmonized Tariff Schedule of the United States (HTSUS), which will be published in the Federal Register.

The U.S. Customs and Border Protection (CBP) has issued guidance on the application of the updated import tariff on Canada (CSMS # 65798609).

Further guidance will be provided via future Cargo Systems Messaging Service (CSMS) notices.

40% duty rate for transshipped goods

Canadian imports that do not qualify as originating under USMCA, and that CBP determines have been transshipped to evade applicable duties, will be subject to an additional ad valorem duty rate of 40% instead of 35%.

In addition to paying the 40% duty rate, if CBP determines that transshipment occurred, importers may be subject to:

• Fines or penalties
• Other duties, fees, taxes, or charges that would normally apply to the goods based on the country of origin.

CBP will not allow any mitigation or remission of any penalties if goods are found to have been transshipped to evade duties.

Next steps for importers of Canadian goods

If you import Canadian goods into the U.S., we recommend you take the following steps:

• Determine if the additional 35% import tariff applies to your imports by reviewing your HTSUS product classifications.
• Revise your cost projections to account for the 35% duty increase and adjust your pricing strategies accordingly.
• Consult your customs broker to ensure proper filings, tariff calculations, and compliance with CBP regulations.

How Cole International can help

At Cole International, we constantly monitor changing trade regulations and offer customs and compliance consulting services to help businesses navigate these changes.

Additionally, we provide timely and efficient customs brokerage services to help U.S. importers streamline their customs clearance and other import processes. 

Please reach out to one of our trade professionals to discuss the impact of the updated import tariff on Canada on your business and how we can help.