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On April 16, 2025, the Government of Canada issued the "United States Surtax Remission Order (2025)" (the "Remission Order") pursuant to section 115 of the Customs Tariff, which was followed by the release of a customs notice on the application of the Remission Order (the "Customs Notice") by the Canada Border Services Agency.
The Remission Order applies to goods imported before October 16, 2025, essentially implementing a six-month reprieve on certain retaliatory tariffs or surtaxes levied by Canada in response to the trade war launched by President Trump's administration. Its stated goal is to provide a broad cross-section of Canadian businesses "additional time to adjust their supply chains and prioritize domestic sources of supply if available."
The Remission Order is one of three measures announced by the Department of Finance earlier this week to help businesses affected by the trade war:
[T]he government intends to provide temporary 6-month relief for goods imported from the U.S. that are used in Canadian manufacturing, processing and food and beverage packaging, and for those used to support public health, health care, public safety, and national security objectives.
The Remission Order is quite broad and should provide relief from Canada's retaliatory measures to many Canadian businesses that are impacted by them. However, certain businesses, particularly those that import goods for retail sale in Canada without any further processing or manufacturing in Canada, will likely continue to face Canada's retaliatory surtaxes.
State of Canada's retaliatory measures
Canada currently has in place retaliatory surtaxes addressing three distinct aspects of the Trump administration's trade war that impact Canada. These measures (collectively, the "Retaliatory Measures") are summarized below.
- Blanket Tariffs: In response to blanket tariffs imposed by the U.S. that applied duties of 10% to all Canadian-origin energy resources (including critical minerals) and potash and duties of 25% on all other Canadian-origin goods, unless they appropriately claim preferential treatment under the Canada-U.S.-Mexico Agreement ("CUSMA"), Canada implemented "Phase 1" of its retaliatory surtaxes (the "Phase 1 Tariffs"), imposing a 25% tariff on approximately $30 billion worth of U.S. imports effective March 4. See our client alert, Trade War Underway: Trump Tariffs Unpaused and Canada's Retaliatory Measures | McCarthy Tétrault.
- Steel and Aluminum Tariffs: President Trump imposed a 25% tariff on all imports of steel and aluminum, and their downstream derivative products, effective March 12, regardless of whether they qualify as originating under CUSMA. In response, Canada adopted a "dollar-for-dollar" approach and on March 13 imposed a 25% retaliatory surtax on a list of steel products (the "Steel and Aluminum Measures") worth $12.6 billion and aluminum products worth $3 billion, as well as additional imported U.S. goods worth $14.2 billion, for a total of $29.8 billion in additional U.S. imports being targeted. See our client alert for more details: U.S. Steel and Aluminum tariffs and new Canadian retaliatory measures now in force: what businesses need to know.
- Auto Tariffs: In response to the imposition of 25% tariffs by the U.S. on automobiles and certain automobile parts, Canada has imposed retaliatory surtax targeting fully assembled vehicles that originate in the United States ("Auto Measures"). More details can be found in our client alert: Trade War Update: Canada Retaliates Against US Tariffs on Automobiles and Parts.
As discussed below, each of these Retaliatory Measures is addressed in part by the Remission Order.
Who and what benefits from the Remission Order?
The Remission Order outlines four categories of eligible goods and importers, each providing a unique scope of relief.
- Manufacturing & Food Packaging: the
broadest category, set out in section 3 of the Remission Order,
provides relief from the Phase 1 Tariffs and Steel and Aluminum
Retaliation "in respect of goods imported for use, in Canada,
in the manufacture or processing of any good or the packaging of a
food product or beverage".
Goods imported for manufacturing, processing, or food and beverage packaging in Canada are eligible for remission of surtaxes imposed under the Phase 1 Tariffs and Steel and Aluminum Measures. The precise ambit of this category is not entirely clear, and interpretive guidance has yet to be released. For example, on a broad reading, items necessary for the manufacturing process but not actually used in production (such as equipment used to support manufacturing processes) may qualify for remission. However, it is unlikely that products imported for retail sale to Canadians will be covered unless further processing or manufacturing occurs in Canada.
- Public safety & national security: any goods imported by or on behalf of Canadian public health, public safety, and national security agencies qualify for remission of surtaxes applied as a result of any of the Retaliatory Measures listed above. Covered entities are prescribed by name or category and include the Canadian Forces, clinical health research organizations, organizations that provide emergency response services and those that produce or store medical countermeasures including pharmaceuticals or medical devices.
- Health care providers: goods "for use in the provision of medically necessary health care services" by health care institutions (including dental clinics and long-term care facilities), providing these importers of these goods the ability to apply for remission of surtaxes paid pursuant to any of the Retaliatory Measures. It also captures all goods imported by or on behalf of entities that provide products or services related to blood, cells, tissues or organs for medically necessary health care, as well as all goods imported by or on behalf of federal, provincial, local or Indigenous health authorities.
- Medical & nutritional products: remission relief from the application of Phase 1 Tariffs also applies to a limited list of medical and medically-adjacent products (specifically, specialized infant formula, nutrition formulas, metabolic products, formulated liquid diet or human milk fortifier, medical compression garments and sterile barrier film or pouches for use in medical manufacturing) that are explicitly identified in the Remission along with their applicable tariff classification numbers.
Application and compliance considerations
As noted above, a Customs Notice has been released that outlines how specifically the Remission Order will be applied. The Customs Notice provides specific instructions on how to apply for remission, and notes that relief can be sought at the time of importation by entering the relevant authorization code in the appropriate field of the importer's declaration. Unique authorization codes are provided for each of the four categories identified above. Unlike the remission program that was put in place for the Phase 1 Tariffs (as described in our client alert released at the time), no formal application is required to claim relief as the Remission Order has been issued.
There are other limitations set out in the Remission Order for remission claims, and these are also set out in the Customs Notice. Specifically, as noted above, the Remission Order is time limited in that it only applies to goods that are imported into Canada before October 16, 2025. Further, the Remission Order requires that any claim for remission be submitted to the Minister within two years of the date of importation of those goods. Finally, to prevent over-reimbursement, a claim for remission under the Remission Order can only be granted if no other claim for relief of surtax paid for that same good has been granted. The Customs Notice states that "all claims for relief of surtax under the Remission Order for these goods must also be supported by all relevant documents" that demonstrate these conditions are met.
Next steps for legal and compliance teams
The Remission Order may provide welcome, though temporary, relief for a wide range of Canadian businesses and organizations affected by the retaliatory tariffs imposed during the U.S.-Canada trade dispute. Businesses that fall within the covered categories should act quickly to understand the eligibility of goods imported before the October 16, 2025, deadline, ensuring they take full advantage of this limited-time opportunity. In particular, they should work with legal and trade advisors to:
- Identify goods that may fall within the scope of the Remission Order.
- Assess eligibility based on use, classification, and importer status.
- Prepare documentation in anticipation of remission claims.
- Ensure internal processes are in place to track applicable imports and to retain documentation supporting any remission claims.
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