2025-03901NoticeWallet

US Slaps Tariffs on Canada To Stop Drugs at Northern Border?!

Published Date: 3/11/2025

Notice

Summary

Starting March 7, 2025, the U.S. is changing the rules on certain Canadian products by adding extra taxes to help stop illegal drugs from crossing our northern border. These new duties affect businesses importing goods from Canada and aim to protect American communities from drug-related harm. The changes come from a series of presidential orders focused on border safety and drug control.

Analyzed Economic Effects

6 provisions identified: 2 benefits, 3 costs, 1 mixed.

New Additional Tariffs on Canadian Imports

Starting March 7, 2025, most imported articles that are products of Canada will be subject to an additional ad valorem rate of duty imposed by Executive Order 14193. The Executive Order imposed an additional 25% ad valorem rate of duty on covered Canadian products, while imports of energy and energy resources that are products of Canada were subject to an additional 10% ad valorem rate of duty.

USMCA-Originating Goods Exempted

Articles entered free of duty as originating in Canada under general note 11 to the HTSUS (including treatment in subchapter XXIII of chapter 98 and subchapter XXII of chapter 99 related to the USMCA) will not be subject to the additional ad valorem rates of duty described in Executive Order 14193. This exemption was adopted to minimize disruption to the U.S. automotive industry and workers and is reflected in new HTSUS heading 9903.01.14.

Potash Subject to Reduced Additional Duty

Potash that is a product of Canada and does not qualify for USMCA duty-free treatment will be subject to a reduced additional ad valorem rate of 10% (HTSUS heading 9903.01.15) for goods entered or withdrawn for consumption on or after 12:01 a.m. eastern standard time on March 7, 2025. This replaces the 25% additional rate that otherwise applied.

De Minimis Exemption May Continue or End

Articles of Canada covered by HTSUS headings 9903.01.14 and 9903.01.15 that are otherwise eligible for the administrative de minimis exemption under 19 U.S.C. 1321(a)(2)(C) may continue to qualify for that exemption, including items sent through the international postal network. The de minimis exemption for those covered articles shall cease to be available upon notification by the Secretary of Commerce to the President that adequate systems are in place to process and collect the tariff revenue.

Foreign-Trade Zone Admissions Change Treatment

Products of Canada (excluding 50 U.S.C. 1702(b) exceptions), except those eligible for admission to a foreign-trade zone under 'domestic status' per 19 CFR 146.43, that are admitted into a U.S. foreign-trade zone on or after 12:01 a.m. eastern standard time 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 order as amended.

Duties Apply With Other Charges; No Drawback

The additional ad valorem duties provided for (including HTSUS heading 9903.01.15) apply in addition to all other applicable duties, taxes, fees, exactions and charges, and apply to products that receive temporary duty exemptions or reductions under subchapter II to chapter 99. No drawback shall be available with respect to the additional duties imposed pursuant to the Executive orders.

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Key Dates

Effective Date
Published Date
3/7/2025
3/11/2025

Department and Agencies

Department
Independent Agency
Agency
Homeland Security Department
U.S. Customs and Border Protection
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