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Update on US Tariffs

In recent weeks Canadian companies have been disrupted by abrupt tariff policy changes instituted by the US government:

• 25% Tariffs on Canadian exports were announced in early February

• 10% Tariffs were implemented in February for US imports from China (with a 10% additional increase in March)

• 25% tariffs on Canadian goods were implemented briefly in early March.

• The tariffs were, in part, waived on March 7 - until April 2. 

• At every juncture there has been confusion about the status of the CUSMA/USMCA

CAF recently presented a webinar on US Tariffs

Link to recording: https://www.caf-fcv.ca/webinars/us-tariff-update-march-6-2025/

Link to slides:  https://drive.google.com/file/d/1AA7do6f1XTmtGEckyQjvEHuQkfSkpnaP/view?usp=sharing

As it stands today:

US tariffs on Canadian Products

• The US imposed 25% tariffs on March 4 and withdrew most tariffs as of March 7

• As of March 7th Canadian goods that comply with the CUSMA/USMCA can enter the US duty free (until April 2)

• If goods do not - they are dutiable at 25% -  most Canadian made apparel will qualify for this waiver

• This applies to apparel and textile products that meet the CUSMA rule of origin, and to goods that use TPLs to access the US market.

• Many firms are confused about this.

• We can provide more details if needed.

Canadian tariffs on US products

Canada's response was to set up a 2 stage tariff/surtax strategy

Stage 1

• The first stage includes includes a range of primarily consumer-focused products  - including apparel and other products made from textiles (carpets, drapes etc.).  

• The list of products from the United States subject to 25 per cent tariffs effective March 4, 2025 is available here:  Link

• 25% tariffs on these products were introduced by Canada on March 4th, and they remain in place today. On an annual basis these goods represent imports of $870 million Canadian

Stage 2

• The Canadian government has also created a list of products that may be subject to a 25% tariff as of April 2.  This includes many textiles (yarns/fabrics)
  
  

Duty Remission

• The Canadian government has requested comment on this list and have circulated information about how (if they are applied) companies will be able to have these tariffs refunded if they are irreplaceable/essential to a business.  This is referred to as duty remission

• Some Canadian apparel manufacturers need to use US-produced textiles and they should apply for this.  

• CAF can assist, and we have member firms that can assist you as well.

De minimis.

• The de-minimis program allows firms to ship low value products from Canada (and other countries) to the US, with minimal paperwork and no duties.  This has applied to virtually all products from virtually all countries.

• The US tariffs against China announced in February also included mechanisms to shut down de minimis shipments from China (or more precisely Chinese products), but these actions have been put on hold, pending a clear determination of how this can be managed.

• Simply put, it was a disaster when the program was rolled out.

• The same action will be taken with respect to shipments of Canadian goods, once the US Department of Commerce addresses how to manage the customs clearance/scrutiny of these shipments.

•  In addition US customs has put forward proposals to require greater information regarding the contents of such shipments.

• However, for the time being this mechanism is in place and companies can use it to fulfil orders.
  
  

Contact at CAF:  

Bob Kirke, Executive Director: bkirke@apparel.ca