Canada is a major trading nation with a relatively complex import tariff system shaped by multilateral agreements like the World Trade Organization (WTO), regional agreements such as the USMCA, and various bilateral relationships. Tariffs are administered by the Canada Border Services Agency (CBSA) and are based on the HS code classification, considering the product’s classification, value, and country of origin. Countries with which Canada has free trade agreements may be eligible for preferential tariff rates, although these rates can change due to trade disputes. Importers must provide the CBSA with detailed product information, including the 10-digit HS code, declared value, and origin. The importer or customs broker typically pays tariffs at the border.
Determining Import Tariffs
Import tariffs are calculated based on the product’s 10-digit HS code, declared value, and country of origin. The Canada Border Services Agency (CBSA) reviews the product classification, applies the appropriate valuation method, and verifies the country of origin to determine the correct tariff rate. Importers or their licensed customs brokers are responsible for ensuring all declared information is accurate, as errors can lead to delays, fines, or other penalties.
Duties and Tariffs
Duties and tariffs are a significant component of customs brokerage fees that can vary greatly. They’re calculated as a percentage of the declared value of the goods being imported.
The specific duty rate varies depending on the nature of the goods and their country of origin. Some goods may be subject to preferential tariff rates due to trade agreements between Canada and other countries.
Even if a nation has preferential status or a free trade agreement, these may be in the form of drawbacks or refunds. This means there would still be an initial payment necessary.
Retaliatory Tariffs: Canada may impose retaliatory tariffs on certain goods from its trading partners in response to tariffs on Canadian products. For example, in response to U.S. tariffs on Canadian steel, aluminum, and automobiles, Canada has implemented countermeasures targeting similar U.S. goods. These retaliatory tariffs can be adjusted depending on the results of trade negotiations or shifts in the political landscape.
Duty-Free and Quota-Free Imports
Canada allows duty-free or quota-free import treatment for certain goods under specific conditions. These exemptions generally fall into the following categories:
1. De Minimis Thresholds
For low-value shipments, Canada provides limited duty and tax exemptions:
- Express Shipments from the United States and Mexico are exempt from customs duties if the item’s FOB (Free on Board) value is under CAD 150. Duties and taxes are waived if the total value (including responsibilities) is under CAD 40.
- Postal Shipments from the U.S. and Mexico benefit from a CAD 20 duty-free threshold.
These de minimis thresholds are intended to simplify customs clearance for low-value goods and may be revised based on future policy changes.
2. Trade Agreement Preferences
Under the USMCA, which replaced NAFTA, goods manufactured in the U.S., Canada, or Mexico may qualify for reduced or zero tariffs if they meet the agreement’s rules of origin. For shipments valued at less than CAD 3,300, a statement on the commercial invoice is generally sufficient to claim preferential tariff treatment.
In addition to the USMCA/CUSMA, Canada has entered into various free trade agreements (FTAs) with other countries and regions, which often reduce or eliminate tariffs on eligible goods.
3. Specific Product Exemptions
Certain products may qualify for temporary duty exemptions, particularly if they are:
- Essential for public health, healthcare, safety, or national security
- Used in manufacturing, processing, or food and beverage packaging
- Intended as humanitarian aid or informational materials
4. Tariff Rate Quotas (TRQs)
Canada applies tariff rate quotas for sensitive products, especially agricultural items like meat, grains, poultry, eggs, and dairy. Imports within the quota benefit from lower or zero tariffs (“quota-free”), while imports exceeding the quota are subject to significantly higher duties. This system protects domestic industries while allowing a controlled volume of low-tariff imports.
Free Trade Agreements
Canada is a party to several bilateral, multilateral, and regional Free Trade Agreements (FTAs). Exporters from a country that has an FTA with Canada benefit from reduced or eliminated tariffs and non-tariff barriers to trade, which may make their product more competitive in Canada. Canada currently has eleven FTAs in force, covering 43 countries and more than half of the global economy. Since 2009, Canada has concluded seven new bilateral FTAs with Peru, Colombia, Jordan, Panama, Honduras, South Korea, and, most recently, Ukraine.
