Canada’s United States Surtax Order (2026) is now live across more than 700 tariff items, and the compliance architecture behind it is proving as consequential for importers as the 15, 25 and 50 per cent rates themselves.
OTTAWA, September 11, 2026
The largest single tranche of Canadian counter-tariffs since the trade conflict with Washington began is now in force, and in its first seventy-two hours the practical story has turned out to be less about the headline rates than about origin marking, entry timing and a customs notice published the day before the order took effect.
The United States Surtax Order (2026), issued by the Governor in Council on September 4, came into force at 12:01 a.m. on September 8. It applies surtaxes of 15, 25 and 50 per cent of the value for duty on specified goods of American origin, covering roughly 27.6 billion dollars of annual imports across more than 700 tariff items. The Canada Border Services Agency published Customs Notice 26-23 on September 7, setting out the administrative rules that importers must now navigate.
The measure was announced on August 25 by Finance Minister François-Philippe Champagne as a dollar for dollar, rate for rate answer to the 50 per cent American tariff applied to 27.6 billion dollars of Canadian goods on August 22 under Section 338 of the United States Tariff Act of 1930. Ottawa suspended trade negotiations in late August, with Champagne saying that the American side had “proposed new terms that were not in Canada’s best interest, basically, asking too much of Canada, and offering too little in return.”
What the rates actually cover
The Department of Finance structured the order so that each Canadian rate mirrors the American rate applied to the corresponding good, which produces an unusually granular schedule rather than a blanket percentage.
Law firm Blake, Cassels and Graydon, in an August 27 client bulletin by Zvi Halpern-Shavim, Brady Gordon, Elena Balkos and James Ashwell, mapped the coverage across more than 600 product classifications targeting the same sectors as the American measures.
Goods carrying the 50 per cent surtax include steel and aluminum products in primary forms such as ingots, bars, rods, wire, tubes and pipes; dairy products including milk concentrates and powders, whey products and casein; pulp, paper and stationery including chemical wood pulp, envelopes and cartons; plywood, veneered panels and laminated wood; electronics including smartphones, monitors and video game consoles; clothing and apparel across suits, jackets, dresses, t-shirts, sweaters and gloves; plastics and rubber articles including floor coverings, tableware and bags; cosmetics and personal care products including perfumes, make-up and hair preparations; and sports equipment including golf clubs and exercise machines.
The 25 per cent band covers wood and lumber including plywood, sawn coniferous wood and softwood; household articles of steel and aluminum such as cookware, sanitary ware and kitchenware; washing machines, dryers and dishwasher parts; carpets and textile floor coverings; knives and cutlery; and cheeses.
The 15 per cent band is the narrowest, covering fork-lift trucks and industrial handling equipment, parts for harvesting and agricultural machinery, air conditioners, and moulds for metal, rubber or plastics.
Two design choices in the order deserve particular attention from importers. First, the Department of Finance advised stakeholders that the new surtaxes are not intended to stack on top of existing counter-tariffs. In sectors such as steel and aluminum, the effect is that the existing 25 per cent counter-tariff rises to 50 per cent rather than being added to a new charge. Second, other existing counter-tariffs, including those on American automobiles, continue to apply independently and are unaffected by the new order.
The origin test is the real gate
The operative question for most importers is not which rate applies but whether the goods are American at all for the purposes of the order.
Customs Notice 26-23 specifies that the surtax applies to goods eligible to be marked as goods of the United States under the Determination of Country of Origin for the Purpose of Marking Goods (CUSMA Countries) Regulations. That is a marking test, not a preferential origin test, and the two do not always produce the same answer for the same shipment.
Several consequences follow. Goods eligible to be marked as originating in Puerto Rico, Guam, the Northern Mariana Islands, American Samoa or the United States Virgin Islands are excluded from the surtax entirely. The surtax can apply to American origin goods that arrive in Canada from a third country, so routing a shipment through another jurisdiction does not by itself remove the charge. For casual goods, CBSA treats goods marked as made in, produced in or originating in the United States as American origin regardless of the country of shipment.
Proof of origin is required subject to the exceptions in the Proof of Origin of Imported Goods Regulations. For commercial goods, a commercial invoice or other documentation containing the minimum CUSMA data elements will generally suffice.
There is a trap embedded in this structure that brokerage firm GHY International has flagged prominently. A product of American origin that does not qualify under CUSMA can face both the Most-Favoured-Nation duty rate and the new surtax. The order does not stack with other Canadian counter-tariffs, but it sits on top of ordinary customs duty, and on top of any anti-dumping or countervailing duty in force. Confirming CUSMA eligibility alongside origin and classification is therefore not a formality but a direct determinant of total landed cost.
Accounting mechanics
The surtax must be declared on the Commercial Accounting Declaration through the CARM Client Portal, by electronic data interchange, or by application programming interface.
Three special authority codes correspond to the three schedules: 26186A for the 15 per cent Schedule 1 goods, 26186B for the 25 per cent Schedule 2 goods, and 26186C for the 50 per cent Schedule 3 goods. The surtax amount is entered in field 85. Importers who self-declare through CARM must calculate the amount themselves rather than relying on system computation.
The calculation base is the value for duty determined under sections 47 to 55 of the Customs Act. GST is charged on the value for tax, which includes the surtax, even where customs duties are remitted. GHY’s advisory illustrates the compounding: on a shipment with a 150 dollar value for duty and no MFN duty, a 25 per cent surtax produces 37.50 dollars of surtax and 9.38 dollars of GST for a combined 46.88 dollars, while a 50 per cent surtax produces 75 dollars of surtax and 11.25 dollars of GST for a combined 86.25 dollars. Add a 5 per cent MFN rate and 34 dollars of anti-dumping duty to the 25 per cent scenario and the total charge reaches 90.45 dollars on a 150 dollar shipment.
Chapters 98 and 99 of the Customs Tariff are generally exempt unless the applicable item is specifically listed in Schedule 4 of the order, even where the underlying classification appears in Schedules 1, 2 or 3. Where both the 2025 and 2026 surtax orders would apply to steel derivative goods, only the 2026 order applies.
Notably, the surtax applies to de minimis shipments that would otherwise qualify under the Postal Imports Remission Order or the Courier Imports Remission Order. Low-value shipment consolidators and e-commerce importers who have built their operations around those thresholds face a change in economics that has little to do with the headline rates.
In-transit relief and the exceptions list
Goods already in transit to Canada when the surtax took effect are exempt, provided the importer can prove transit status. CBSA considers goods to be in transit when they are bound for Canada, have not yet arrived, and remain under carrier control. Bills of lading, report of entry documents and cargo control documents are the acceptable evidence.
The exceptions list is longer than many importers realise. It includes goods imported at a Campobello Island port of entry by qualifying New Brunswick residents returning within 24 hours with goods for personal or household use; goods imported under an Import for Re-Export Program permit where all conditions including further processing in Canada and export within the specified timelines are satisfied; American-made goods previously imported into Canada and duty-paid that are subsequently returned; certain American-made goods repaired or altered across the border, excluding vessels returned under tariff item 9971.00.00; baggage and conveyances temporarily imported by non-residents under tariff item 9803.00.00; eligible ships’ stores that are not diverted; and goods covered by applicable personal exemptions, with the surtax applying to any amount exceeding the exemption. The surtax is also remitted for eligible commercial and casual goods imported by Akwesasne residents.
Duties Relief and Duty Drawback are both available for surtax paid or payable, subject to CUSMA requirements. For CUSMA-originating goods of American or Mexican origin, the CUSMA limitations and the lesser-of-two-duties determination do not apply, which means full relief may be available where the criteria are met. That is a materially better outcome than many importers assume, and it rewards firms that have maintained drawback programs through the quieter years.
Remission, and a narrowing door
Canada’s remission framework remains open for goods not already covered by the United States Surtax Remission Order (2025), and the government has indicated that existing remission relief, including for steel, is expected to extend to the new surtaxes pending approval.
The direction of travel, however, has been toward tightening rather than widening relief. McCarthy Tétrault has documented CBSA guidance that narrows the practical scope of the remission order relative to its text, and advisers have noted that policy since early 2026 has trended toward constraint. Under the framework, non-steel goods used in Canada for manufacturing, processing, food and beverage packaging, and agricultural production are eligible, with manufacturing and agricultural production defined broadly to include North American Industry Classification System sectors 31 to 33 and sector 11.
The practical advice from brokers is uniform and worth repeating: claim remission at the time of entry rather than seeking a refund afterward. Refund processing can run to months, and the cash flow cost of financing a 50 per cent surtax while awaiting reimbursement is precisely the pressure that has pushed some firms toward insolvency in earlier rounds.
Importers should also understand the limits of appeal. The imposition of the surtax itself is not appealable under the Customs Tariff or the Customs Act. What is appealable is a CBSA determination or re-determination of origin, tariff classification or value for duty. An importer receiving a notice under subsection 59(2) may request a section 60 review within 90 days, and only after paying the amounts owed. Advance rulings remain available on origin, classification and marking for goods imported from a CUSMA country.
Prices, and what the evidence says
The most consequential single change for Canadian households is the doubling of the steel and aluminum counter-tariff from 25 to 50 per cent, combined with the new 25 per cent charge on American household appliances.
The intuitive conclusion is that appliance and vehicle prices rise by something close to the tariff rate. The empirical record suggests otherwise. Bank of Canada researchers who tracked daily prices at seven major Canadian retailers through the earlier round of counter-tariffs found that prices on tariffed goods rose gradually and peaked at roughly 6 per cent after three months, about one quarter of the 25 per cent rate then in force. Spillover to untariffed substitute products was limited, and when the counter-tariffs were subsequently removed, the price increases reversed quickly.
Applied to a refrigerator with a 1,200 dollar price tag, a full pass-through of a 25 per cent tariff would imply roughly 300 Canadian dollars of additional cost. The pattern observed by the Bank of Canada implies something closer to 70 dollars in the near term.
The Bank’s broader modelling flags that retaliatory tariffs do feed the consumer price index, because roughly 13 per cent of the CPI basket consists of goods imported from the United States. The transmission is real but partial.
One finding from that research has an uncomfortable implication for policy. Bank of Canada researchers observed that visible tariff labelling at the point of sale made retailers more willing to raise prices. Transparency measures intended to inform consumers may therefore accelerate the very pass-through they were designed to illuminate.
Canada was the largest export market for American household appliances last year, purchasing more than one billion United States dollars worth, most of which now attracts the new 25 per cent charge. Steel and aluminum exposure is more diffuse, embedded in construction, renovation, vehicles and manufactured goods, which is why the effect will present as gradual cost drift rather than a visible step change at the till.
Who is carrying the cost
Survey evidence from the Canadian Federation of Independent Business, collected from 1,545 members between August 28 and August 31 with a margin of error of plus or minus 2.49 per cent nineteen times out of twenty, gives the clearest picture of where the burden is landing.
Forty-nine per cent of Canadian importers sourcing from the United States report being affected by the Canadian retaliatory tariffs, and 46 per cent of Canadian exporters selling into the United States report being affected by the American Section 338 measures. Twenty-eight per cent of all business owners report major negative impacts from the counter-tariffs, marginally more than the 26 per cent reporting major negative impacts from the American tariffs.
Impacted businesses report median monthly costs of 65,000 dollars. Twelve per cent of affected importers and 18 per cent of affected exporters say they would cease to be financially viable if the trade conflict runs three months or longer.
Pricing power is splitting the business population close to evenly. Forty-two per cent expect to absorb most of the new tariff costs; 41 per cent expect to pass most of them through. Firms are also changing suppliers, reducing purchase volumes, delaying hiring and investment, and seeking tariff relief.
The CFIB findings also record a nuance that is easy to miss in the political coverage. Business owners broadly support Canada’s negotiating stance and its retaliatory measures, while overwhelmingly wanting negotiations to resume quickly. Support for the policy and desire for its end are not in tension; they reflect a judgment that the response is correct and that the situation is unsustainable.
Practical steps for importers
Trade advisers are converging on a checklist for the weeks ahead.
Classify at the tariff item level rather than by product category. The published list identifies goods by Canadian tariff item, Harmonized System heading, description and rate, and runs to hundreds of entries. A product that appears to fall in an affected sector may not be listed, and a product in an unaffected sector may be.
Confirm American origin under the CUSMA marking rules specifically, and document the determination. Confirm CUSMA eligibility separately, because that is what determines whether MFN duty stacks on top of the surtax.
Review any shipments that were in transit on September 8 and preserve the documentation establishing transit status. This relief is available once and cannot be reconstructed after the fact.
Verify that CARM accounting is configured with the correct special authority code for each affected good, and that field 85 is being populated correctly. Corrections and adjustments can be made through the portal, by electronic data interchange or by API, with corrections required before the payment due date and adjustments available afterward within the legislative timeframe. Casual goods adjustments require Form B2G and cannot be submitted through CARM.
Review remission eligibility, Duties Relief and Duty Drawback options with a broker, and claim at entry. Model the GST consequence, which is charged on a base that includes the surtax.
Finally, assume verification. CBSA may examine goods at importation and may conduct post-release verification, including re-determination of origin, classification and value for duty, and may assess undeclared surtax with penalties and interest attached.
The wider frame
Ottawa paired the counter-tariffs with a 7.5 billion dollar support package announced on August 25, on top of nearly 25 billion dollars in supports provided since the American tariffs began. The package includes an additional 1.5 billion dollars for the Regional Tariff Response Initiative, a 500 million dollar liquidity stream under the Business Development Bank of Canada’s Pivot to Grow program, a lowered one million dollar minimum revenue threshold for BDC tariff programs, 2 billion dollars through a new Canada Strong Diversification Fund, 3.5 billion dollars in Rapid Response Supports for Workers and Employers, and new flexibilities under the Large Enterprise Tariff Loan facility.
Champagne framed the combined package as protection rather than escalation. “Our dollar-for-dollar, rate for rate counter-tariffs as well as a multi-billion dollar support package will protect workers, farmers, families, and businesses as we build a stronger, more resilient, and more diversified Canadian economy,” he said in the August 25 release.
Whether that holds depends on duration. The CFIB viability figures suggest a three-month horizon beyond which a meaningful share of affected firms stop being going concerns. The Bank of Canada’s next rate decision is October 28, roughly seven weeks after the surtax took effect and near the outer edge of that window.
For now, the order is live, the guidance is published, and the compliance burden has shifted from anticipating the measure to administering it. That is a different kind of work, and for most Canadian importers it is the work of the next several months.