US Tariffs on Canada to Stop Fentanyl Sneaking Over North Border
Published Date: 3/6/2025
Notice
Summary
Starting March 4, 2025, the U.S. is adding extra taxes on certain Canadian products to fight illegal drugs crossing our northern border. This move affects businesses importing goods from Canada and aims to pressure Canada to step up against drug trafficking. The new duties will impact the cost of these imports and help protect American communities from dangerous drugs like fentanyl.
Analyzed Economic Effects
6 provisions identified: 1 benefits, 4 costs, 1 mixed.
25% Tariff on Most Canadian Imports
Starting March 4, 2025, most articles that are products of Canada will face an additional 25% ad valorem duty under new HTSUS heading 9903.01.10. This 25% duty applies in addition to any other applicable duties, taxes, fees, or charges.
10% Tariff on Canadian Energy & Critical Minerals
Starting March 4, 2025, Canadian energy and energy resources (including crude oil, natural gas, refined petroleum products, uranium, coal, biofuels, geothermal heat, flowing water kinetic energy, and critical minerals) are subject to an additional 10% ad valorem duty under new HTSUS heading 9903.01.13. The 10% duty applies in addition to any other applicable duties, taxes, fees, or charges.
De Minimis (Small-Parcel) Duty Treatment Continued — Then May End
Articles of Canada that would otherwise be eligible for the administrative de minimis exemption (including those sent through the international postal network) may continue to receive duty-free de minimis treatment until the Secretary of Commerce notifies the President that adequate systems exist to collect the new tariff revenue, at which point de minimis treatment for those covered articles shall cease. The continuation or cessation of de minimis treatment affects entries covered by headings 9903.01.10 and 9903.01.13.
No Drawback Refunds for the New Duties
The notice states that no drawback shall be available with respect to the additional duties imposed by these Executive Orders. Importers or firms that export or use imported Canadian materials cannot claim drawback relief for the additional ad valorem duties imposed by headings 9903.01.10 or 9903.01.13.
Foreign-Trade Zone Admission and Duty Treatment Changed
Articles that are products of Canada (excluding certain 50 U.S.C. 1702(b) exceptions) admitted into a U.S. foreign-trade zone on or after 12:01 a.m. EST on March 4, 2025, must be admitted as 'privileged foreign status' and will be subject, upon entry for consumption, to the additional duties imposed by the Executive Orders. The applicable HTSUS classification and duty rates at the time of admission apply.
Donations & Informational Materials Exempt but Must Be Declared
Certain articles that fall under 50 U.S.C. 1702(b)—specifically donations intended to relieve human suffering (now covered by HTSUS heading 9903.01.11) and informational materials (now covered by HTSUS heading 9903.01.12)—are not subject to the additional ad valorem duties, but are to be entered under the new HTSUS headings. Products for personal use in accompanied baggage remain excluded from the additional duties.
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