Order Amending the United States Surtax Order (2025-1) and the United States Surtax Order (Steel and Aluminum 2025): SOR/2025-119

Canada Gazette, Part II, Volume 159, Number 9

Registration
SOR/2025-119 April 8, 2025

CUSTOMS TARIFF

P.C. 2025-464 April 7, 2025

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance and the Minister for International Trade, makes the annexed Order Amending the United States Surtax Order (2025-1) and the United States Surtax Order (Steel and Aluminum 2025) under subsection 53(2)^{footnote a} of the Customs Tariff ^{footnote b}.

Order Amending the United States Surtax Order (2025-1) and the United States Surtax Order (Steel and Aluminum 2025)

United States Surtax Order (2025-1)

1 (1) Paragraph 3(2)(a) of the French version of the United States Surtax Order (2025-1) ^{footnote 1} is replaced by the following:

• a) les marchandises classées dans la position 40.11 qui sont destinées à être utilisées comme pièces d’équipement d’origine dans la production de tout véhicule, engin ou appareil ou de toute machine mentionnés dans cette position;

(2) Subsection 3(2) of the Order is amended by striking out “and” at the end of paragraph (a) and by adding the following after paragraph (b):

• (c) goods that are imported from the United States at a port of entry on Campobello Island, New Brunswick, if the goods
  • (i) are imported by a person who ordinarily resides on Campobello Island and who is returning after an absence from Canada of less than 24 hours,
  • (ii) are in the person’s possession or form part of their baggage, and
  • (iii) are for personal or household use; and
• (d) goods that are imported under the authority of a permit issued under subsection 8.3(3) of the Export and Import Permits Act, if the permit specifies that it is issued for purposes of the Import for Re-Export Program.

United States Surtax Order (Steel and Aluminum 2025)

2 Section 2 of the United States Surtax Order (Steel and Aluminum 2025) ^{footnote 2} is amended by striking out “and” at the end of paragraph (a), by adding “and” at the end of paragraph (b) and by adding the following after paragraph (b):

• (c) goods that are imported from the United States at a port of entry on Campobello Island, New Brunswick, if the goods
  • (i) are imported by a person who ordinarily resides on Campobello Island and who is returning after an absence from Canada of less than 24 hours,
  • (ii) are in the person’s possession or form part of their baggage, and
  • (iii) are for personal or household use.

Coming into Force

3 This Order comes into force on April 9, 2025, but if it is registered after that day, it comes into force on the day on which it is registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Order.)

Issues

Canada is amending certain reciprocal tariff measures to maintain its response to U.S. tariffs while providing exemptions for certain goods.

Background

The North American region is the most economically integrated in the world, centred on the large and mutually beneficial to the Canada and the United States trade relationship featuring over $1 trillion in goods and services crossing the border annually. Canada is the top export destination for U.S. goods overall and these trade ties support nearly 8 million American jobs. Canada also supports the U.S. economy with nearly $1 trillion in foreign direct investment per year and as its top supplier of energy. Canadian and American industries are made stronger and more globally competitive because of integrated supply chains that produce higher value-added goods for export to other regions.

There have been significant engagements by Canada since the U.S. presidential elections to argue against any application of U.S. tariffs, to ensure the negative consequences of tariffs for the United States are clear, and to emphasize that Canada is prepared to respond. U.S. tariffs are a direct and flagrant violation of its market access obligations under the Canada-United States-Mexico Agreement (CUSMA), as well as its commitments at the World Trade Organization.

On February 1, 2025, the Trump administration announced the imposition of 25% tariffs against imports of all Canadian goods. After a period of delay, on March 4, the United States imposed 25% tariffs on all Canadian goods and 10% tariffs on imported energy products from Canada (on March 7, these tariffs were narrowed to apply only to goods that do not meet CUSMA rules of origin). In response, Canada imposed 25% tariffs against the original $30 billion of annual imports under the United States Surtax Order (2025-1) on March 4 and announced a public comment period on additional tariff measures. The comment period closed on April 2.

Further, effective March 12, the United States amended section 232 steel and aluminum tariffs to remove all previous exclusions, including from Canada, and set the tariffs at 25% for both steel and aluminum. In response, on March 13, Canada imposed reciprocal tariffs of 25% against $29.8 billion in annual imports of steel, aluminum, and other products from the United States under the United States Surtax Order (Steel and Aluminum 2025).

Section 53 of the Customs Tariff provides for the ability to apply trade measures, including tariffs, to respond to acts, policies or practices of other countries’ governments that adversely affect, or lead directly or indirectly to adverse effects on, trade in goods or services of Canada.

Objective

The objective of Canada’s tariffs is to continue mirroring U.S. trade actions while providing certain exemptions to safeguard Canadian manufacturing activities and avoid unintended consequences for residents of an island community.

Description

The United States Surtax Order (2025-1), which targeted $30 billion annually in American consumer and household products beginning on March 4, is amended effective April 9, 2025. An exemption from the tariffs is extended to the poultry and egg products covered by the Order, provided they are eligible to be imported through Supplemental Import Permits issued under Canada’s Import for Re-export Program (IREP). This program allows Canadian processors to import these goods on a duty-free basis if they meet the requirements of being used as inputs for further processing and re-exportation within specified time periods.

Another exemption, applicable to both the United States Surtax Order (2025-1) and the United States Surtax Order (Steel and Aluminum 2025) effective April 9, covers personal or household goods acquired in the United States and imported into Canada by residents of Campobello Island, in New Brunswick. As the island has limited supplies and is only accessible by automobile via the United States for most of the year, its nearly 1 000 residents have no practical choice but to depend on purchasing their day-to-day household products and groceries in the United States.

Regulatory development

Consultation

Given the gravity of U.S. tariff actions and the need to ensure immediate, robust and reciprocal responses in real time, the Government previously imposed counter tariffs under the United States Surtax Order (2025-1) and the United States Surtax Order (Steel and Aluminum 2025). At the same time, Canada’s public comment period has generated extensive stakeholder input and feedback, with nearly 7 000 written submissions that the Government is continuing to assess and take into consideration.

In this context, affected processors of supply-managed goods identified IREP eligible imports as having the potential to be impacted by the surtaxes, which were only intended to target such goods entering the domestic market through CUSMA’s import quota regime. The exemption ensures that the tariff-free importation of goods under the IREP will continue unimpeded, allowing this program to align with Canada’s broader duty relief schemes that incentivize domestic processing and export activities. Without the exemption, surtaxes could limit the competitiveness of the Canadian food processing sector in export markets.

In the case of the residents of Campobello Island, residents and the province of New Brunswick raised concerns that the application of tariffs to household goods and groceries purchased in the United States was creating unintended hardship, given the exceptional situation of the island due to its unique geographical and transportation circumstances.

Modern treaty obligations and Indigenous engagement and consultation

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

Subsection 53(2) of the Customs Tariff provides the authority for the Governor in Council, on the recommendation of the Minister of Finance and the Minister of Foreign Affairs, by Order, to make goods that originate in any country subject to a surtax for the purpose of responding to acts, policies or practices of a country that adversely affect, or lead directly or indirectly to adverse effects on, trade in goods or services of Canada.

The powers, duties and functions of the Minister of Foreign Affairs under subsection 53(2) of the Customs Tariff were transferred to the Minister for International Trade by the Order Transferring from the Minister of Foreign Affairs to the Minister for International Trade the Powers, Duties and Functions Under Subsection 53(2) of the Customs Tariff.

Other instruments were considered, but were found unsuitable in terms of effectively addressing U.S. tariffs in a timely manner.

Regulatory analysis

Benefits and costs

These reciprocal countermeasures signal Canada’s resolute intent to force a prompt end to the U.S. tariffs in order to protect Canadian industries and their integrated supply chains. Should the United States eliminate or suspend its tariffs against Canada, Canada’s trade measures would also be repealed or suspended, respectively.

That said, Canada’s tariff measures need to be balanced to avoid unintended or undue impacts on Canadians. In this regard, the exemption from surtaxes for poultry and egg products that are eligible for the IREP will ensure that the costs of these inputs do not increase. This will also preserve the IREP on an equal footing with respect to other similar duty relief schemes (i.e. the Canada Border Services Agency’s [CBSA] Duties Relief and Duty Drawback Programs) that apply more broadly to industrial goods, allowing for their duty-free importation contingent upon further processing and exportation of the resulting finished products. The exemption ensures that the IREP may continue to support Canadian food processing and export activities.

For Campobello Island residents, the tariff exemption will allow for the continuation of their regular and necessary cross-border purchasing activities without any undue increase in the price of critical personal or household goods acquired in the United States.

Small business lens

Analysis under the small business lens determined that the measure would not impose administrative or compliance requirements on Canadian small businesses. Taxes (including tariffs) are not included in the definitions of administrative and compliance burden in the Policy on Limiting Regulatory Burden on Business. The exemption for IREP eligible products does not introduce incremental administrative burden, as it will use existing documentation under the program. The exemption for residents of Campobello Island impacts individuals and has no impact on Canadian small businesses.

One-for-one rule

The one-for-one rule does not apply, as there is no incremental change in administrative burden on businesses. Duties and taxes (including tariffs) do not meet the definition of administrative burden in the Red Tape Reduction Act and are not subject to the offset requirement under the rule. As noted above, the exemption for IREP eligible products does not introduce incremental administrative burden, as it will use existing documentation under the program. The exemption for residents of Campobello Island impacts individuals and has no impact on Canadian businesses.

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, Canada is also actively exploring ways to consolidate its trade ties with Mexico. More broadly, Canada is consulting and cooperating with United States trade partners affected by American tariffs.

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 this Order.

Implementation, compliance and enforcement, and service standards

The CBSA is responsible for administering Customs Tariff legislation and regulations, including these amended orders effective April 9, 2025. The CBSA will release a Customs Notice to inform the importing community of issues related to the administration of the tariffs.

Contact

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