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12 July 2018 Canada updates final import surtaxes imposed on certain products originating in the US; CBSA Customs Notice issued Effective 1 July 2018, Canada imposed a 25% or 10% surtax on steel and aluminum products and many consumer goods originating in the United States (US) under two retaliatory surtax orders. Certain exclusions from the originally proposed retaliatory tariffs were made, and the Canada Border Services Agency (CBSA) issued Customs Notice 18-08 clarifying the application of the surtax, adding certain exceptions thereto, and confirming that the Duties Relief and Duty Drawback programs relieving measures will apply to covered goods. Following a month-long public consultation, in response to the US' announcement to remove the Canadian exemption from the global "national security interests" tariffs imposed on US imports of steel and aluminum products at the rates of 25% and 10%, respectively, Canada implemented dollar-for-dollar retaliatory surtaxes on US originating goods similar to what was originally proposed last May. The surtaxes are imposed under the United States Surtax Order (Steel and Aluminum) (SOR/2018-152) and the United States Surtax Order (Other Goods) (SOR/2018-153). For further information on Canada's proposed countermeasure action, see EY Global Tax Alert, Canada to impose retaliatory tariffs on certain US origin products starting 1 July 2018, dated 14 June 2018. The imported goods originating in the US that are subject to Canada's countermeasures are listed under three tables released by the Department of Finance (at link below). Table 1 goods are subject to a 25% surtax and cover primary iron and steel products (including bars, rods, tubes, pipes and wires). Table 2 goods are subject to a 10% surtax and cover primary aluminum products and many finished aluminum goods, and Table 3 goods are also subject to a 10% surtax applicable to many consumer goods including food products, household products, recreational goods and, not surprisingly, wood and paper products. Link to final Tables: https://www.fin.gc.ca/access/tt-it/cacsap-cmpcaa-1-eng.asp Significant changes from the 31 May 2018 original proposed listing to the final list of goods subject to the retaliatory surtaxes were the removal of manufacturing inputs in Chapters 72, 73, 76, 85 and 90, in particular:
It is important to note that the goods listed in Tables 1, 2 and 3 referred to above (which correspond to Schedules 1 and 2 of the United States Surtax Order (Steel and Aluminum) and the Schedule to the United States Surtax Order (Other Goods) that are also listed under provisions in Chapters 98 and 99 of the Schedule to Canada's Customs Tariff are subject to the surtaxes, even though they are entitled to a preferential tariff rate of customs duty under these concessionary Chapters (usually duty free), subject to a few exceptions in Chapter 98. The exceptions include conveyances and containers engaged in international commercial transportation, temporary imports of conveyances and baggage for non-commercial purposes, travelers' exemptions (e.g., the 48-hour or 7-day exemptions) and certain settler's effects. In addition, the surtaxes do not apply to goods originating in the US that were in transit to Canada prior to 1 July 2018. Importantly, Canada's Duties Relief and Duty Drawback Programs continue to be available to importers for surtaxes paid or otherwise owing by Canadian businesses that meet the requirements of the programs. This means that duty deferral can apply to the surtax subject goods that are destined for re-export or as inputs therefor, and duty drawback can apply where the goods are exported or destroyed without use in Canada or are used as inputs in exported goods. Document ID: 2018-5855 |
