U.S. Tariffs on Canadian Goods Raised
- Arne Mielken
- Jul 31
- 3 min read
Updated: Aug 8
The U.S. just raised tariffs on Canadian imports to 35% over a fentanyl dispute. Here's what Customs professionals need to know.
U.S. Customs compliance just got more complicated for importers of Canadian goods. On July 31, 2025, President Trump signed a new Executive Order raising the punitive tariff rate on specific Canadian imports from 25% to 35%. The move comes amid escalating tensions with Canada over the flow of illicit drugs—specifically fentanyl—across the northern border.
This blog breaks down the key changes, implications for your supply chain, and how to stay compliant.
Arne’s Takeaways
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Who We Are – Customs Manager Ltd.
We help businesses in the EU, UK, and U.S. navigate Customs, Trade Compliance, Export Controls, and Sanctions. Get real-time updates with our Trade Intelligence Service at www.customsmanager.info.
Key Questions Covered in This Blog
What is the new U.S. tariff policy on Canadian imports?
Which Canadian products are affected?
How does transshipment affect duty rates?
Do USMCA rules still offer duty-free access?
What should importers do now?
Abbreviations Used in This Blog
USMCA – United States-Mexico-Canada Agreement
HTSUS – Harmonized Tariff Schedule of the United States
CBP – Customs and Border Protection
IEEPA – International Emergency Economic Powers Act
"This is not about trade anymore. It's about national security, compliance, and protecting your margins." Arne Mielken, Managing Director, Customs Manager
Fancy a Call?Let’s talk strategy. Book an expert session now to review your U.S.–Canada import compliance plan. Get Weekly Game-Changing UpdatesSubscribe to The Customs Watch USA to stay ahead of every customs, sanctions, and export control update that matters. Visit www.customsmanager.info. |
What is the new U.S. tariff policy on Canadian imports?
As of August 1, 2025, the U.S. imposes a 35% additional duty on a range of Canadian-origin goods previously hit with a 25% rate. This measure builds on Executive Order 14193, issued in February 2025, and escalates penalties in response to alleged Canadian inaction in curbing cross-border drug trafficking.
This applies to goods listed under heading 9903.01.10 of the HTSUS. These include industrial and manufactured products that do not qualify for duty-free treatment under USMCA rules.
Download Executive Order
Which Canadian products are affected?
The increased 35% duty targets Canadian goods already subject to the 25% rate, mainly in sectors like aluminum, steel, chemicals, and industrial components. These are listed in HTSUS Chapter 99 Subchapter III, particularly heading 9903.01.10.
Practical Expert Recommendation Check if your Canadian-origin imports fall under HTSUS heading 9903.01.10 and whether they qualify under USMCA. |
How does transshipment affect duty rates?
The Executive Order introduces a new 40% duty rate for Canadian goods that don’t meet USMCA rules and are deemed by CBP to have been transshipped to avoid tariffs. This is codified under heading 9903.01.16.
CBP will strictly enforce this and won’t grant penalty mitigation. Transshipped goods could also face penalties under 19 U.S.C. 1592 and additional taxes.
Practical Expert Recommendation Audit your supply chain to ensure no transshipped goods from third countries are misdeclared as Canadian. |
Do USMCA rules still offer duty-free access?
Yes—but only if the goods meet USMCA origin requirements. Goods that qualify under USMCA are exempt from the punitive tariffs. Non-originating goods, or those that fail origin verifications, are fully exposed to the new 35% or 40% rates.
Canada-origin goods benefiting from Chapter 98 provisions may still be affected depending on subheading. For example, 9802.00.80 remains exposed to duties on assembly costs.
Practical Expert Recommendation Don’t assume duty-free access. Validate USMCA claims and check Chapter 98 use-case limitations. |
What should importers do now?
Classify all Canadian-origin imports correctly using HTSUS.
Review USMCA origin claims and supply chain routes.
Conduct a transshipment risk assessment.
Train compliance staff on new rules.
Consult with a Customs expert to avoid costly missteps.
Use this table to guide your action:
Task | Responsible Team | Deadline |
Reclassify HTS codes | Customs & Compliance | 10 Aug 2025 |
Validate USMCA Origin | Procurement | 15 Aug 2025 |
Run Transshipment Audit | Supply Chain | 18 Aug 2025 |
Train Staff | HR & Compliance | 20 Aug 2025 |
Book Expert Review | Legal/Customs | ASAP |
Sources & Further Information
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Disclaimer
Please note that the information provided in this article is for general informational purposes only and does not constitute legal, tax, or professional advice. Always consult a qualified Customs Consultant for advice tailored to your specific situation.
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