In early 2025, Canada imposed a 25% surtax on certain U.S. goods, from catalogs to processed foods. This recent change makes understanding Canadian tariffs in 2025 more important than ever for American exporters.
The economic relationship between Canada and the United States remains under constant pressure from policy changes, global supply chain issues, and changing trade agreements. This post breaks down what American exporters need to know about Canada’s tariff structure today, including how we got here and how to stay competitive in the upcoming year.
A Brief History of Canada-U.S. Tariffs
The trade relationship between Canada and the U.S. has long been defined by cooperation peppered with occasional friction. The economic ties between these trading partners run deep and are built on decades of cross-border investment. In fact, Canada is consistently one of the top destinations for American exports and a vital source of key goods for the U.S. economy, and vice versa.
According to the Office of the United States Trade Representative, in 2024 the United States exported $349.4 billion in goods to Canada, including vehicles, machinery, energy products, and more than $30 billion in agricultural products such as baked goods, cereals, fresh vegetables, and fruits. Canada exported $412.7 billion in goods to the U.S., with leading imports being energy products, vehicles, and over $40 billion in agricultural items.
This long-standing partnership has been supported by many trade agreements over the years, including the Canada-U.S. Free Trade Agreement (CUSFTA) in 1989 and the North American Free Trade Agreement (NAFTA) in 1994, both of which laid the groundwork for an integrated North American market. These agreements significantly reduced or eliminated many tariffs, boosted cross-border commerce, and helped Canadian and American businesses scale beyond their national borders.
However, the relationship has not been without its challenges. In 2018, the Trump administration imposed tariffs on Canadian steel and aluminum products under the International Emergency Economic Powers Act, citing national security concerns. The Canadian government responded with retaliatory tariffs on a range of U.S. goods, including aluminum products, dairy products, agricultural exports, whiskey, and household items such as toilet paper. These countermeasures sparked a brief but impactful trade war, disrupting established supply chains and forcing companies to reevaluate their inputs, pricing strategies, and customer relationships.
Still, the two nations remained committed to preserving their strong trade relationship. The signing of the United States-Mexico-Canada Agreement (USMCA)—known as CUSMA in Canada—marked a new chapter in regional cooperation. Coming into effect in 2020, the agreement modernized key provisions from NAFTA, introduced digital trade rules, and reaffirmed commitments to fair-trade practices.
Despite lingering disagreements around sensitive sectors such as dairy products, aluminum, and automotive manufacturing, the agreement reinforced the resilience of Canada-U.S. trade.
Canada’s Tariff System in 2025
As of 2025, Canadian tariffs remain a critical element of that country’s trade policy. The Government of Canada applies tariffs based on the Most-Favoured-Nation (MFN) tariff schedule. These MFN rates apply to most countries, including the United States, unless superseded by a trade agreement.
The Canadian Border Services Agency (CBSA) administers customs duties and collects tariffs. Among other requirements, American companies exporting to Canada must verify if their products qualify under the rules of origin requirements to avoid unexpected tariffs. It’s important to remember that Canada also applies import taxes (such as the GST, or Goods and Services Tax or HST, Harmonized Sales Tax) on most goods, which can increase costs to Canadian importers and consumers even when MFN or USMCA tariffs are low or nonexistent.
However, in early March, Canada responded to renewed U.S. tariffs on Canadian steel, aluminum, and related products by adding 539 Harmonized System (HS) codes to its list of U.S. goods subject to a new 25% surtax. Then, on March 13, the Government of Canada expanded the list, this time adding another set of HS codes, bringing the total to nearly 1,800. These newly impacted goods include categories previously untouched, such as toys and printed materials including books. For American businesses, the 25% tariff didn’t come out of their pocket, but it did make their products more expensive for Canadian buyers. That price jump often leads to fewer sales, lost customers, or pressure to discount just to stay in the game.
What Products Are Subject to Canadian Tariffs?
While CUSMA eliminated many tariffs between the U.S., Canada, and Mexico, some goods still face import duties or restrictions. Here are a few categories that often raise flags:
- Dairy products. Canada protects its dairy industry through supply management, including quotas and high-percent tariffs for imports exceeding those quotas.
- Aluminum products. Tariff rates on these vary depending on global supply and political developments. Counter-tariffs have previously targeted U.S. aluminum.
- Agricultural products. Eggs, poultry, and some grains can face tariffs or quantity limits.
- Consumer goods. Items including mattresses, some clothing, and footwear have historically faced MFN tariffs.
It’s also important to stay alert for new tariffs. In response to global trade conditions, inflationary pressures, or supply chain concerns, Canada may impose temporary tariffs, countermeasures, or new product classifications at any time.
Canada Tariffs and Trade Policy Shifts
Canada’s approach to tariffs in 2025 continues to be shaped by global forces. As China and the United States continue to clash over trade issues, and as the European Union and Mexico attempt to forge new deals, Canada has had to reassert its position with clear trade policy objectives.
Ottawa is increasingly focused on safeguarding its competitiveness while protecting strategic industries. This is particularly evident in the discussion around reciprocal tariffs. For instance, if the U.S. implements new tariffs under national security pretenses—as the Trump administration has already done—Canada may respond with more retaliatory tariffs of its own.
The Canadian government has also signaled an interest in diversifying exports and reducing overreliance on the U.S. market. While the U.S. remains a key trading partner, policymakers in Ottawa are working to deepen ties with the European Union and Asian markets. American businesses should pay attention to these shifts, as they may affect which goods face new tariffs, how quickly new trade deals are negotiated, and what other markets become more accessible or more restricted.
For American exporters, navigating Canadian tariffs means keeping a close eye on both U.S. and Canadian policy developments. Understanding rules of origin under CUSMA, classifying goods correctly, and maintaining compliance with shifting trade rules is essential to avoid delays, unexpected duties, or disputes at the border.
What We Know About Canadian Tariffs: FAQ for U.S. Exporters
We know that navigating tariffs can be confusing, especially with new surtaxes and policy changes emerging throughout 2025. Below, we’ve answered some of the most frequently asked questions from U.S. businesses exporting to Canada.
Do all U.S. goods enter Canada tariff-free? No. While CUSMA reduces or eliminates many tariffs, not all goods are covered, especially those in protected sectors such as dairy or aluminum.
Can tariffs be refunded if goods are returned? In some cases, yes. However, the refund typically goes to the Canadian importer. If a Canadian customer returns goods they imported from the U.S., they may be eligible for a duty drawback or refund under Canadian law. The importer must apply within a specific time frame and meet the program’s conditions. U.S. exporters generally can’t claim this refund themselves.
Will tariffs go up in 2025? Possibly. Political decisions, supply chain concerns, and even environmental regulations can influence tariffs. Keep tabs on Ottawa and Washington.
How do Canadian tariffs compare with U.S. tariffs? Both countries apply percent tariffs based on product category and origin. Canada’s tariffs can be more protective in areas such as dairy, while the U.S. has imposed more ad hoc tariffs in recent years.
Where can I find updated tariff information? If you’re importing goods into the U.S., the official Harmonized Tariff Schedule is available at hts.usitc.gov through the U.S. International Trade Commission.
For tariffs on U.S. goods being exported to other countries—like Canada—you’ll need to check that country’s customs authority. In Canada, tariff rates and surtax lists can be found through the Canada Border Services Agency (CBSA) or the Canada Tariff Finder.
Staying Compliant: What U.S. Businesses Must Do
Understanding the basics is a good start, but staying compliant requires proactive planning. The good news? With the right tools and a clear checklist, staying ahead of Canadian tariffs is possible and manageable.
If your company exports U.S. goods to Canada, it’s essential to:
- Understand the tariff rates. Use the CBSA’s Customs Tariff tool to identify applicable MFN or preferential tariff rates.
- Verify CUSMA eligibility. Ensure your products meet the rules of origin criteria. Mislabeling or incorrect paperwork can result in standard MFN tariffs being applied.
- Watch for countermeasures. Stay aware of any new retaliatory tariffs that may be imposed in response to shifting U.S. trade policy.
- Monitor regulatory updates. Canada frequently adjusts its tariff schedule and classification system. Regularly check the CBSA and Government of Canada websites for changes.
- Plan for costs. Even though your Canadian customers are the ones paying the tariffs, it’s smart to understand the full cost picture. Taxes, customs brokerage fees, and transport costs can all affect your pricing strategy and profitability.
Staying Ahead of Tariffs
In 2025, businesses need to factor in tariffs as part of a broader strategy around trade agreements, supply chains, and international competitiveness.
With mounting pressure from the China-U.S. trade war, ongoing challenges with global inputs, and a renewed focus on national security, trade policy is in flux. The U.S. president, the prime minister of Canada, and entities such as the WTO all influence the next moves, but that doesn’t mean businesses can’t be prepared or adapt accordingly.
At ePost Global, we bring years of experience navigating international shipping and trade regulations, helping eCommerce businesses stay compliant and competitive even as policies shift. Our team stays up-to-date on the latest tariff developments across major markets so you don’t have to. Whether you need help with documentation, duty classification, or optimizing your shipping strategy to avoid costly delays, we’re here to guide you through every step.
Tariffs may be complicated, but with ePost Global as your logistics partner, your international growth doesn’t have to be.
