Understanding Canada’s 25% Surtax on U.S. Steel and Aluminum

Trade Update • March 18, 2025

n response to U.S. tariffs imposed on Canadian steel and aluminum imports, Canada introduced a 25% surtax on steel, aluminum, and certain other goods of United States origin, effective March 13, 2025, under the United States Surtax Order (Steel and Aluminum 2025).

However, there is some confusion regarding the application of Chapter 98 and Chapter 99 of Canada’s Customs Tariff. Here’s a breakdown to help clarify the details.

Who Applies the Surtax?

The Canada Border Services Agency (CBSA) is responsible for administering this surtax, which applies to both commercial and personal importations, regardless of whether the goods are shipped directly from the U.S. or through another country.

Aluminum: Chapter 98 Exemptions (Schedule 1)

Certain aluminum and other goods listed in Schedule 1 that qualify under specific tariff items of Chapter 98 of Canada’s Customs Tariff are exempt from the surtax. However, exceptions apply to goods classified under the following tariff items:

• 9804.30
• 98.25
• 98.26
• 9897.00.00
• 9898.00.00
• 9899.00.00

These goods remain subject to the surtax, even if they fall under Chapter 98.

Aluminum: Chapter 99 Exemptions (Schedule 1)

Similarly, aluminum and other Schedule 1 goods classified under Chapter 99 of Canada’s Customs Tariff are generally exempt from the surtax. However, the following tariff items will still be subject to the surtax:

• 9966.00.00
• 9971.00.00
• 9989.00.00

Even if these goods qualify for the Most-Favoured-Nation (MFN) zero customs duty rate under Chapter 99, the 25% surtax still applies upon importation into Canada.

Steel: Chapter 98 or 99 (Schedule 2)

For steel products, the surtax applies to goods listed in Schedule 2 of the United States Surtax Order (Steel and Aluminum 2025), even if they are eligible for classification under Chapter 98 or 99. This means that while some goods may qualify for the MFN zero-duty rate, they will still be subject to the 25% surtax when imported into Canada.

Resources

Navigating Canada’s surtax regulations can be complex, especially when dealing with exemptions under Chapters 98 and 99. Importers should carefully review the tariff classifications and surtax schedules to determine whether their goods are subject to the 25% surtax.

Customs Notice 25-11: United States Surtax Order (Steel and Aluminum 2025)
Orders In Council – 25% Surtax
List of products from the United States subject to 25 per cent tariffs effective March 13, 2025

Customs Surety Bonds

The implementation of new tariffs by the governments of the United States and Canada will significantly increase duty payments for importers, directly affecting their customs surety obligations. Understanding these obligations is essential to prevent disruptions in the import process.

Customs Surety Requirements in Canada

Under new framework of the CBSA Assessment and Revenue Management (CARM), all importers must soon secure their own customs bond to cover duty payments. To facilitate this transition, importers have a 180-day grace period ending on April 19, 2025, to secure a bond.

Given the introduction of a 25% tariff on U.S.-origin goods, duty payments will increase significantly. Canadian importers should review their current surety arrangements to ensure compliance. If an importer’s surety does not cover the required duty payment at the time of import, CBSA may detain the shipment until sufficient surety is provided or duties are paid in full.

Customs Surety Requirements in the U.S.

The imposition of universal tariffs on goods from Canada, Mexico, and China requires U.S. bondholders to reassess the sufficiency of their customs bonds. If an importer’s bond does not cover the value of duties at the time of import, U.S. Customs and Border Protection (CBP) may issue a written notification requiring an increase in bond coverage.

Importers generally have 30 days to adjust their surety. Failure to do so may result in bond termination, leaving the importer without coverage for customs duties. In such cases, goods will be held at the border until the importer secures adequate surety or pays the duties in full.

How GHY Can Help?

GHY specializes in helping businesses navigate and reduce the impacts of tariffs through strategic solutions tailored to their needs. Our experts can audit your supply chain to identify inefficiencies, uncover cost-saving opportunities, and ensure compliance with evolving trade regulations. We also employ tariff engineering techniques to optimize product classification and sourcing strategies, minimizing duty exposure and maximizing profitability.

By partnering with GHY, your business gains access to the tools and expertise needed to streamline operations and stay competitive in a challenging trade environment.

Please contact your Client Care Manager or our Global Trade Services Team gts@ghy.com, or call +1 (800) 667-0771.