Synopsis Of New U.S. And Canadian Metals And Minerals Tariff Treatment

Following a flurry of U.S. executive orders on tariffs and the Canada-U.S. trading relationship, there has been significant changes in the tariff treatment of minerals and metals. This client alert provides an overview of these changes, on a commodity by commodity basis as of April 10, 2025, and offers broad guidance on navigating this new reality. As the current situation remains extremely fluid and constantly evolving, please contact our International Trade & Investment Law Group or Global Metals & Mining Group for further assistance.

Background

On April 2, 2025, United States President Donald Trump signed an executive order ("EO") applying "reciprocal tariffs" on nearly all U.S. trading partners. For Canada, the EO does not impose any new tariffs but maintains the existing "blanket" tariffs applied on the asserted basis of the powers granted to President Trump under the U.S. federal International Emergency Economic Powers Act ("IEEPA"). These include 10% tariffs on imports of energy and energy resources, critical resources and potash from Canada, and 25% tariffs on effectively all other imports from Canada. These tariffs took effect on March 4, but were suspended on March 6 for goods considered to originate in Canada pursuant to the rules of origin under the U.S.-Mexico-Canada Agreement ("USMCA" or "CUSMA") and claimed as such upon importation into the United States. For more detail regarding the application of this exception for USMCA originating goods, please see "Does your product qualify for the USMCA exception?" further below.

The EO notes that, in the event the existing Executive Order imposing blanket tariffs against Canada is terminated or suspended, USMCA-compliant goods would continue to receive preferential treatment, while non-USMCA compliant goods, subject to numerous exceptions for metals and minerals, would be subject to a 12% reciprocal tariff. In this way, the EO does propose a possible new tariff on Canadian goods if the above-discussed "blanket" tariffs fall away.

Separate and apart from these blanket tariffs, steel and aluminum, and their downstream derivative products, originating in Canada are subject to a 25% tariff upon importation into the United States. On February 10, President Trump signed executive orders ending exemptions to section 232 tariffs on steel and aluminum imports so as to reimpose this 25% tariff on all steel imports and raise the 10% tariff on aluminum imports to 25%. This came into effect on March 12.

In response to these US tariffs, Canada has retaliated by imposing a 25% retaliatory surtax on approximately $30 billion worth of U.S. imports effective March 4. The Canadian Government had announced a "Phase 2" process, which would have implemented further tariffs on $125 billion imports of additional goods from the U.S., but this has been paused. On March 13, Canada also imposed, a 25% retaliatory surtax on a list of U.S. steel products worth $12.6 billion and U.S. aluminum products worth $3 billion, as well as additional U.S. goods worth $14.2 billion, for a total of $29.8 billion.

Current Tariff Treatment

The below table outlines the application of U.S. tariffs to Canadian metals and minerals and the application of Canadian retaliatory surtaxes to U.S. metals and minerals as of April 10, 2025.¹

Application of U.S. Tariffs and Canadian Retaliatory Surtaxes

Does your product qualify for the USMCA exception?

On March 6, 2025, by way of executive order the Trump administration implemented a suspension of tariffs on goods from Canada and Mexico that claim and qualify for the USMCA preference for originating goods. This exemption was initially in force until April 2, but has been extended indefinitely.

The exemption applies to a broad range of products but does not cover all Canadian imports. In fact, recent reports indicate that only approximately 38% of Canadian goods shipped to the United States have been imported on a USMCA-compliant basis, leaving the remaining 62% potentially still subject to tariffs. However, these figures do not accurately reflect the ultimate share of goods from Canada that may be able to enter the United States on such a basis. In the import/export business, it has been a common practice among many Canadian companies to refrain from claiming USMCA preference on imports into the United States that have a 0% or relatively low rate of customs duty. Many companies considered the complicated assessment of the USMCA rules of origin not worth the hassle in the absence of any significant cost savings on customs duties. While many of these goods may be USMCA compliant, and therefore able to take advantage of this exception, it may also be challenging for Canadian companies to quickly determine whether their goods are compliant with the rules of origin.

In the case of any natural resources (such as minerals, oil, gas, or timber) and agricultural products that are extracted or grown and harvested within Canada, the United States and Mexico without any inputs from outside of the USMCA countries, certifying that the product originates can be fairly straightforward. For products that are manufactured or processed within one or more of the USMCA countries but include non-USMCA originating inputs or materials, satisfying the origin requirements can entail a far more complex exercise. In such cases, USMCA provides rules of origin on a product-by product basis which can include necessary "tariff shifts" for non-USMCA inputs and regional value content requirements, and in the case of automotive products, higher wage labour value content requirements. Considerations include:

• Whether there has been "substantial transformation" ― these are finished goods that are significantly transformed in the production process such that the final good is classified differently than its constituents goods;
• Indirect materials ― consideration of goods used in production, testing, or inspection, but not incorporated into the final product;
• Production location and regional value content ― these criteria contemplate certain required percentages of the value of the goods being sourced and/or produced from and in a specific signatory country. Note that the assessment requires review of the place the goods are produced, not necessarily their place of export; and
• Various rules around customs control and shipping/transshipment.

Certifying goods as originating when they do not can lead to significant liabilities. Exporters and manufacturers risk being liable for extra duty costs if their certification is incorrect, while importers may face retroactive duties and taxes. Agencies such as the Canada Border Services Agency and U.S. Customs and Border Protection verify origin claims through targeted and random auditing. To mitigate these risks, it is important to understand the certification process and include contract clauses that allocate such risks clearly.

Footnotes

1. This list covers Canadian originating metals and minerals. Metals and minerals originating from other countries will not be afforded the same tariff treatment.

2. With respect to Phase 1 goods, the Department of Finance released a "List of products that are subject to Phase 1" which identifies 1,256 tariff codes on which the surtax is now imposed

Canada has also released the "List of products from the United States subject to 25 per cent tariffs effective March 13, 2025", imposing a 25% reciprocal tariffs on steel, aluminum and additional imported U.S. goods, with a total worth of $29.8 billion. This wave of tariffs is in addition to the already established counter-tariffs on $30 billion worth of U.S. products.

With respect to Phase 2 goods, the Department of Finance issued a "Notice of Intent to Impose Countermeasures in Response to United States Tariffs on Canadian Goods", but this process has been paused for now.

3. Note the list of Critical Minerals was created based on directives from the Energy Act of 2020 and was presented by the Secretary of the Interior, acting through the Director of the U.S. Geological Survey, they include the following: aluminum, antimony, arsenic, barite, beryllium, bismuth, cerium, cesium, chromium, cobalt, dysprosium, erbium, europium, fluorspar, gadolinium, gallium, germanium, graphite, hafnium, holmium, indium, iridium, lanthanum, lithium, lutetium, magnesium, manganese, neodymium, nickel, niobium, palladium, platinum, praseodymium, rhodium, rubidium, ruthenium, samarium, scandium, tantalum, tellurium, terbium, thulium, tin, titanium, tungsten, vanadium, ytterbium, yttrium, zinc, and zirconium.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.