1361339

Please review the following important message from Daniel Caramori, Vice President, Chamber Network Engagement, Canadian Chamber of Commerce, and share your feedback on Canada’s counter tariffs. 

Dear Chamber colleagues,

In a new reversal on tariffs, President Trump signed two executive orders on March 6 that temporarily suspended tariffs on various Canadian and Mexican goods that had taken effect just two days prior. After Ontario Premier Doug Ford announced a 25% surcharge on electricity exports to the United States and the U.S. responded by doubling tariffs on steel and aluminum to 50%, these measures are now on hold. The situation remains fluid, and we will continue to monitor developments closely. We will endeavour to continue to keep you informed regarding the latest major tariff developments. For the time being, please see below updates on 1) U.S. tariffs, 2) Canadian countermeasures, and 3) Finance Canada’s consultation on the second phase of Canada’s tariff response.

The Canadian Chamber team is closely tracking the latest developments in the U.S., as well as the various responses to the U.S. tariffs by the Canadian federal and provincial governments. Notably, the Canadian Chamber leadership team was also on the ground in Washington D.C. last week to directly make the case against the U.S. tariffs and meet with partners and policymakers to advocate for the interests of Canadian industry.

We remain very interested in hearing your thoughts and concerns on the latest tariff developments. If you are planning to share your feedback on Canada’s counter tariffs through Finance’s consultation, please also share your feedback with us. Understanding your tariff concerns will help the Canadian Chamber ensure that our advocacy is aligned with your priorities.

1) U.S. tariff updates

  • Tariff exemptions for CUSMA compliant Canadian imports into the U.S. until April 2. President Trump announced on March 3 that the tariffs he threatened under the International Emergency Economic Powers Act (IEEPA), namely, 25% across-the-board tariffs & the 10% energy tariff, would enter into force on March 4 at 12:01 a.m. However, on March 6, President Trump signed an Executive Order that temporarily suspended these tariffs on Canadian goods that claim and qualify for CUSMA preference until April 2 (see the related Fact Sheet for more information). Notably, any tariffs that were collected from March 4-6 will not be refunded.

According to a White House official that briefed reporters, only 38% of imports from Canada used CUSMA preferences last year whereas 50% of imports by Mexico did. These figures reflect the fact that the Most Favoured Nation (MFN) tariffs via the WTO were 0% or relatively low at the time and there was therefore often not a need for Canadian exporters to utilize tariff preference under CUSMA to ship to the U.S. It is expected that there will now be a shift towards using the CUSMA preference to avoid the tariffs. Economists have come up with different numbers for how many goods the tariff suspension could affect. According to calculations by the Peterson Institute for International Economics, about 85% percent of U.S. merchandise imports from Canada and Mexico may be eligible for preferential tariffs under CUSMA.

Finance Canada is interpreting ‘CUSMA-compliant’ trade based on whether companies claim CUSMA preferential treatment when exporting goods to the U.S. (i.e. by completing the necessary trade documentation for CUSMA tariff rates) and whether they meet the CUSMA rules of origin provisions. Additionally, according to Finance Canada, transitioning from Most Favored Nation (MFN) status to CUSMA preference may not be overly burdensome for many companies, as they may already be complying with CUSMA’s rules of origin requirements.

  • Other tariff exemptions and adjustments. In addition to the exemption for CUSMA compliant Canadian imports, the following temporary exemptions and adjustments to the IEEPA tariffs against Canada are now in place:
    • There is a lower 10% tariff on any potash imported from Canada and Mexico that falls outside the CUSMA preference.
    • On March 5, the White House announced that a 30 day tariff exemption would be granted for vehicles made in compliance with USMCA “so they are not at an economic disadvantage.” 
    • On March 2, an Executive Order was issued that creates a temporary exception for goods eligible for duty-free de minimis treatment from Canada (e.g. shipments valued at less than $800). Per the Executive Order, this exemption will cease to be available once adequate systems have been put in place to collect tariff revenues.
  • Steel and aluminum tariffs (25%) to double – taking effect on March 12. On February 10, President Trump “restored” Section 232 tariffs on steel and aluminum that the U.S. had imposed in 2018, raising the aluminum tariff rate to 25% to match the steel tariff rate. According to the President, the tariffs will go into effect on March 12. On March 11, President Trump made post on Truth Social indicating that the tariffs against Canadian steel and aluminum would double to 50% in response to Ontario’s surcharge on electricity supplied to neighbouring states. The situation remains highly fluid, especially as the Canadian government is expected to respond to this escalation.

The U.S. Federal register notices for tariffs on steel and aluminum have been published. These include extended lists of targeted derivative products. Notably, the scope products covered is substantially larger than the scope of products covered in the steel and aluminum tariffs from 2018. Even if your exports were not impacted by U.S. tariffs in 2018, it is important to verify whether your businesses might be impacted by the latest tariffs by checking the tariff codes in the federal register notices. Many downstream products likely will be impacted (e.g. auto parts, furniture, gym equipment, etc.)

2) Canada’s retaliatory tariffs and other responsive measures

3) Finance Canada’s consultation on counter tariffs

Finance Canada has launched its 21-day consultation on the second phase of Canada’s tariff response (25% tariffs on $125 billion worth of imported goods). The consultation webpage can be viewed here.

The government is seeking views on the proposed tariff measures, including the scope of goods targeted by Canada’s second phase of counter tariffs. The list of potential goods that might be tariffed can be viewed here. Notably, this list of goods is cumulatively valued at approximately $200 billion, whereas the second phase of retaliatory tariffs is intended to only capture $125 billion worth of goods. This disparity has been acknowledged by Finance Cananda and points to the fact that there is presently flexibility regarding goods the government might remove from its counter tariff list.

Input on tariff measures should be provided by completing this form. If you wish to provide additional information not included in the form, as well as any additional views or comments you would like to provide on Canada’s tariff response, you can also e-mail consultations@fin.gc.ca, and include “U.S. Tariff Consultations” in the subject line.  While the notice period ends on April 2, the Government may need to respond to additional tariff threats from the United States before this date. Should the U.S. impose additional tariffs on Canada, the government would consider all options in response.

If you are planning to share your feedback on the counter tariffs through this consultation, please also share your feedback with us. Understanding your tariff concerns will help the Canadian Chamber ensure that our advocacy is aligned with your priorities.

Note: The $125 billion retaliatory tariff package is presently linked to the 25% and 10% IEEPA tariffs. If the section 232 tariffs on steel and aluminum take effect this week, the Canadian government will respond with a separate retaliatory package that may draw from the existing lists.

Thank you for your engagement. We will keep you informed of future developments.