Understanding the Impact of New Tariffs on Trade Relations

Overview of the New Tariff Structure

This new tariff structure stems from the International Emergency Economic Powers Act (IEEPA), which has been in effect for Canadian imports since March 4, 2025. Initially, the IEEPA imposed a 25% tariff on most imports, while energy and potash products faced a reduced rate of 10%. However, the situation escalated dramatically on August 1, 2025, with the general IEEPA tariff climbing to 35%, while energy and potash tariffs remained at 10%.

This sharp increase means U.S. buyers must pay close attention to the costs of importing items from Canada. Furthermore, the elimination of the de minimis exemption means that most small parcels may incur duties unless they qualify under the Canada-United States-Mexico Agreement (CUSMA), which allows for duty-free treatment if the importer claims it correctly.

Key Changes and Their Implications

Understanding the timeline of key changes helps clarify the current trade landscape:

• March 4, 2025: The IEEPA tariffs of 25% were implemented on most Canadian imports, with a 10% rate for energy and potash.

  
  

• March 7, 2025: Goods qualifying for CUSMA remained exempt from IEEPA tariffs, providing an important pathway to avoid added expenses.

  
  

• August 1, 2025: The general IEEPA tariff increased to 35%, while energy and potash rates stayed at 10%.

  
  

• August 29, 2025: The U.S. revoked the $800 de minimis exemption for most imports, impacting small parcel shipments significantly.

  
  

These changes place the burden of duties and taxes on U.S. buyers at the point of delivery. If an order qualifies under CUSMA, the federal duty rate may drop to as low as 0%. However, it is crucial to note that if CUSMA is not claimed, or if items do not qualify, U.S. customs can impose duties, including the special IEEPA tariff.

The Role of Documentation

To reduce costs, sellers must provide the necessary documentation for customs brokers to claim CUSMA on eligible goods. This paperwork should include:

• Commercial invoices detailing product descriptions and origins.

• CUSMA certification for individual shipments or blanket certifications for wholesale customers spread over a year.

  
  

Effective documentation is essential for minimizing added tariffs. U.S. buyers need to ensure that they have all the necessary forms ready and understand the specific CUSMA qualification requirements. Without proper paperwork, they risk facing heavier tariffs and unexpected fees.

Challenges for Small Orders

The end of the de minimis exemption creates significant hurdles for small orders. Small parcels may now incur duties that substantially raise costs for U.S. buyers. For example, for a small business ordering $300 worth of Canadian merchandise, the additional 35% tariff could result in a $105 duty, effectively making the goods much less affordable.

Shipping fees are also distinct from duties and taxes, resulting in a more intricate cost structure when importing from Canada. Importers are advised to seek insights from customs brokers for tailored tariff questions to ensure compliance and understand the full range of potential expenses.

Navigating the New Trade Landscape

The new U.S. tariffs on Canadian goods introduce both challenges and opportunities for U.S. buyers and Canadian exporters. With the responsibility for duties and taxes now falling on U.S. buyers, understanding this new environment is crucial. Proper documentation and knowledge of CUSMA qualifications can help reduce costs and ensure compliance.

Staying informed about these changes is essential for anyone engaged in cross-border trade. By proactively seeking guidance from customs brokers, U.S. buyers can effectively adapt to new regulations and maintain successful trade relationships with their Canadian suppliers.

Conclusion

In conclusion, the recent changes in tariffs and trade regulations between the United States and Canada present a complex landscape for businesses. Understanding the implications of these changes is vital for navigating the new trade environment. By focusing on proper documentation and compliance with CUSMA, U.S. buyers can mitigate the impact of increased tariffs and continue to engage in fruitful trade with Canadian exporters.

Made in Canada, Cherished by All.