Executive summary

On 7 September 2026, the Canadian government released two orders-in-council to implement Canadian counter-tariffs announced by the Minister of Finance and National Revenue (the Minister) on 25 August 2026.

The United States Surtax Order (2026),P.C. 2026 — 785, and the Order Amending the United States Surtax Order (Steel and Aluminum 2025), P.C. 2026 — 786, will be published in Part II of the Canada Gazette on 23 September 2026 as SOR/2026-186 and SOR/2026-187, respectively.

The counter-tariffs apply to products covering CA$27.6b in imports from the United States and focus on sectors that are most affected by US tariffs imposed on Canadian goods under section 338 of the Tariff Act of 1930.

SOR/2026-186 imposes a surtax of 15%, 25% or 50% on a wide range of imported US-origin goods, including certain dairy products, appliances, agricultural equipment, pulp and paper, and electronics. SOR/2026-187 amends the United States Surtax Order (Steel and Aluminum 2025), SOR/2025-95(Steel and Aluminum Order) to increase the surtax rate imposed under that order from 25% to 50% on certain steel and aluminum products. The 50% rate now applies to the majority of steel and aluminum products that are currently subject to the surtax under the Steel and Aluminum Order.

In addition, the Canada Border Services Agency (CBSA) has published Customs Notice 26-23, United States Surtax Order (2026) and updated Customs Notice 25-11, United States Surtax Order (Steel and Aluminum 2025).

SOR/2026-186 — United States Surtax Order (2026)

Effective 8 September 2026, goods that originate in the United States and that are classified under any of the tariff items set out in Schedule 1, 2 or 3 of SOR/2026-186 are subject to a surtax of 15%, 25% or 50%, respectively. Goods are considered to originate in the United States if they are eligible to be marked as goods of the United States in accordance with the Determination of Country of Origin for the Purpose of Marking Goods (CUSMA Countries) Regulations.

The surtax applies to goods imported for commercial and casual purposes, even if they are exported from a country other than the United States, into Canada. As well, it applies to US-origin goods that may be eligible for relief under the Postal Imports Remission Order or the Courier Imports Remission Order.

In general, the surtax applies to the tariff items announced by the Minister on 25 August 2026 that are not listed in the Steel and Aluminum Order, as well as certain tariff items from Chapters 98 and 99 of the List of Tariff Provisions, which are listed in Schedule 4.

The surtax applies to the goods' value for duty, as determined under sections 47 to 55 of the Customs Act.

Goods listed in Schedule 1 that are subject to the 15% tariff include:

• Air conditioning machines comprising a motor-driven fan and elements for changing the temperature and humidity
• Fork-lift trucks and other lifting, handling, loading or unloading machinery
• Harvesting or threshing machinery

Goods listed in Schedule 2 that are subject to the 25% tariff include:

• Certain dairy products (cheese and curd)
• Wood sawn or chipped lengthwise, sliced or peeled, whether planed, sanded or end-jointed, of a thickness exceeding 6 mm
• Toilet paper
• Carpets and other textile floor coverings
• Certain cooking appliances (e.g., stoves, ranges, grates, cookers and barbecues) and plate warmers
• Spoons, forks, ladles, skimmers, cake-servers, fish-knives, butter knives, sugar tongs and similar kitchen or tableware
• Appliances such as refrigerators, freezers, dishwashers and household or laundry-type washing machines
• Rail locomotives, as well as parts of railway or tramway locomotives or rolling stock
• Trailers and semi-trailers

Goods listed in Schedule 3 that are subject to the 50% tariff include:

• Certain dairy products (milk and cream, whey)
• Natural honey and molasses
• Various cosmetics
• Plywood, veneered panels and similar laminated wood
• Paper and paperboard
• Registers, account books, notebooks, order books, receipt books, letter pads, memorandum pads, diaries and similar articles
• Men's or boys' suits, as well as men's or boys' overcoats
• Women's or girls' suits, as well as women's or girls' overcoats
• Track suits, ski suits and swimwear
• Copper wire
• Telephone sets, including smartphones and other telephones for cellular networks or for other wireless networks
• Certain metal and wooden furniture
• Luminaires and lighting fittings
• Video game consoles and machines
• Articles and equipment for general physical exercise, gymnastics, athletics, other sports or outdoor games

For a full list of goods that are subject to counter-tariffs effective 8 September 2026, see Complete list of U.S. products subject to counter tariffs - Canada.ca.

The surtax imposed under SOR/2026-186 does not apply to goods classified under a tariff item in Chapter 98 or 99 of the List of Tariff Provisions unless that tariff item is set out in Schedule 4, regardless of whether the goods are otherwise classifiable under a tariff item set out in Schedule 1, 2 or 3. For example, the surtax would not apply to goods that are made in the United States and that are repaired or altered across the border.

The surtax also does not apply to goods that were in transit to Canada on 8 September 2026. The phrase "in transit to Canada" means goods that are bound for, but have not yet arrived in, Canada and that are under the control of a carrier. Upon request by a CBSA officer, importers must provide proof that such goods were in transit to Canada, such as shipping documents, report of entry documents and cargo control documents.

Finally, the surtax does not apply to goods imported under the authority of a permit issued under subsection 8.3(3) of the Export and Import Permits Act, if the permit specifies that it is issued for the purposes of the Import for Re-Export Program.

The United States Surtax Remission Order (2025) is amended to grant relief from surtaxes imposed under SOR/2026-186, in accordance with the existing remission framework. For example, remission may be available for imports of goods:

• Used to support public health, public safety and national security objectives
• For use in providing medically necessary health care services
• For use in Canadian manufacturing, processing, and food and beverage packaging

In addition, the Steel Derivative Goods Surtax Order is amended to provide that the surtax imposed under that order does not apply to goods that are subject to a surtax under SOR/2026-186.

SOR/2026-187 — Order Amending the United States Surtax Order (Steel and Aluminum 2025)

On 13 March 2025, Canada imposed counter-tariffs covering CA$29.8b worth of US-origin products, including a 25% reciprocal tariff on US-origin steel and aluminum products, in accordance with the Steel and Aluminum Order. The surtax applies to the goods' value for duty, as determined under sections 47 to 55 of the Customs Act. While Canada removed counter-tariffs on many US-origin goods effective 1 September 2025, measures remained in place for steel and aluminum. (See EY Global Tax Alert, Canada removing tariffs on certain US goods; Canadian business support measures announced, dated 19 September 2025.)

Effective 8 September 2026, SOR/2026-187 amends the Steel and Aluminum Order so that tariff items that were listed in Schedule 1 of that order (i.e., aluminum products) are split into two schedules: Schedule 1 (for which the 25% surtax rate remains unchanged) and Schedule 1.1 (for which the 25% surtax rate has increased to 50%). In practice, only aluminum products falling under tariff item 7615¹ remain subject to tax at the 25% surtax rate. All other goods that were listed previously under Schedule 1 are now listed under Schedule 1.1 and subject to the 50% surtax.

As well, all existing tariff items that were listed in Schedule 2 of the Steel and Aluminum Order (steel products) are split into two schedules: Schedule 2 (for which the 25% surtax rate remains unchanged) and Schedule 2.1 (for which the 25% surtax rate has increased to 50%). The majority of steel products that were listed previously in Schedule 2 are now listed under Schedule 2.1 and subject to the 50% surtax.

The surtax applies to US-origin goods including those that may be eligible for relief under the Postal Imports Remission Order or the Courier Imports Remission Order.

Goods that were in transit to Canada on 8 September 2026 are subject to the surtax rate that applied to them before that day. As noted above, "in transit to Canada" means goods that are bound for, but have not yet arrived in, Canada and that are under the control of a carrier.

The surtax does not apply to goods that are classified under a tariff item of Chapter 98 or Chapter 99 of the Schedule to Canada's Customs Tariff, unless:

• The tariff item is listed in Schedule 3 or Schedule 4 of the Steel and Aluminum Order.
• The good is otherwise classifiable under a tariff item listed in Schedule 1, 1.1, 2 or 2.1 of SOR/2026-187.

Duty relief and deferral

As noted in EY Global Tax Alert, Canada announces counter-tariffs in response to new US tariffs, dated 28 August 2026, Canada's tariff remission framework remains available to assess requests for exceptional relief. For a brief summary of the remission relief process, refer to the Department of Finance's news release dated 31 August 2026, "Process for requesting remission of tariffs that apply on certain goods from the U.S."

Canada's duties relief and duty drawback programs also remain available for surtax paid or payable, subject to the duty refund provisions of the Canada-United States-Mexico Agreement.

Implications

Multinational enterprises importing US-origin goods into Canada should assess the effect of the new and increased surtaxes on their supply chains and landed costs, confirm the tariff classification and origin of affected goods, and evaluate whether any exclusions, remission or duty relief programs may apply.