Canada Puts 15% to 50% Surtax on $27.6bn of U.S. Goods from 8 September 2026

Canada will implement a new Customs Tariff for 2026, with some counter-tariffs effective September 8, 2026.

Canada has imposed counter-tariffs of 15%, 25% and 50% on $27.6bn of U.S. goods, matching dollar-for-dollar the latest U.S. Section 338 tariffs and taking effect at 12:01 a.m. on September 8, 2026.

The new duties land on steel, dairy, appliances, agricultural equipment, pulp, paper, plastics and electronics — sectors already hit by earlier U.S. measures. Every tonne of U.S. powdered milk (0402.10.10) now carries a 50% surtax, while tractors, refrigerators and circuit boards face rates of 15% or 25%^{1, 2}.

It is the first time Canada has raised its retaliatory tariffs to the same level as the U.S. imposed on Canadian exports. The delivered cost of every affected shipment will rise by the full surtax, on top of existing duties and sales taxes³.

The sectors in the cross-hairs

The $27.6bn list covers 1,463 tariff lines. Steel and aluminum products that were previously subject to 25% counter-tariffs now face 50%, matching the new U.S. rate. Dairy products — powdered milk, cheese and yogurt — are hit at the same 50% level. Appliances, including refrigerators and washing machines, carry 25%, while electronics such as semiconductors and printed circuits are taxed at 15%^{1, 2}.

Agricultural equipment, pulp and paper, and plastic products round out the list. The government has published a searchable tariff finder so importers can look up individual HS codes⁴.

Who pays, and who is spared

The surtax applies to all goods that originate in the U.S., defined as those eligible to be marked “Made in USA” under the CUSMA marking rules. Goods in transit to Canada on September 8 are exempt, as are returning Canadian residents who stay within their personal exemption limits^{3, 5}.

Travellers bringing back U.S.-made goods for personal use will pay the surtax only if the value exceeds CAN$200 after a 24-hour absence or CAN$800 after 48 hours. The surtax is added to the value for duty, so sales tax is calculated on the higher amount⁵.

How remission works

The government will consider remission — a waiver of the surtax — in two cases: when the goods cannot be sourced domestically or from a third country, and when exceptional circumstances would cause severe economic harm⁶.

Requests must be filed by a Canadian-registered company and include detailed cost breakdowns, proof that domestic or third-country substitutes are unavailable, and an explanation of how remission would affect employment and production. The Department of Finance will consult domestic producers before making a recommendation to the Minister⁶.

The auto sector’s one-year reprieve

Motor vehicles and parts are not on the September 8 list because the government has renewed a separate remission order for eligible automakers. Under the United States Surtax Remission Order (Motor Vehicles 2026), CUSMA-compliant vehicles imported between April 9, 2026 and April 8, 2027 are exempt from the 25% counter-tariff, provided the manufacturer maintains or expands Canadian production⁷.

The order followed a public consultation in March–April 2025 that drew 131 submissions, most from vehicle importers worried about consumer affordability. The government has pledged to keep engaging with automakers to monitor domestic production and investment⁷.

What comes next for customs tariff

The counter-tariffs are open-ended, with no sunset date. The government has also launched a $7.5bn support package that includes liquidity aid for small and medium-sized enterprises through regional development agencies¹.

A separate $1.5bn Regional Tariff Response Initiative will help firms adapt to the new trade landscape. The Strategic Response Fund will administer the money, targeting sectors most exposed to U.S. tariffs¹.

The bigger picture

The move follows months of unsuccessful negotiations with Washington. Canada suspended talks after the U.S. demanded concessions that would have undermined Canadian workers and strategic industries. The government has made clear that the counter-tariffs are a defensive measure, not a negotiating tactic¹.

In parallel, Canada is pursuing trade diversification. In November 2025 it tabled notices of intent to negotiate free-trade agreements with the Philippines, the United Arab Emirates, Thailand and India. Public consultations on resuming talks with the Mercosur bloc have also concluded⁷.

What the documents do not say

The Customs Tariff 2026 files, updated in June, show the new rates but do not spell out how long they will stay in place. The remission process is case-by-case, so there is no guarantee of relief even for critical inputs. The government has not published a timeline for reviewing the measures or for future consultations^{8, 9}.

The forced-labour angle

While the counter-tariffs dominate the headlines, the Customs Tariff Act has also been amended to tighten the ban on goods made with forced labour. Bill C-35, now before Parliament, would move the prohibition from the Customs Tariff to a standalone statute and empower the Minister of Foreign Affairs to publish a public list of high-risk goods^{10, 11}.

The list would enable risk-based enforcement and require importers of listed goods to provide additional information on request. The government is consulting on how the list should be built, with a focus on fairness, clarity and alignment with international partners¹¹.

The bottom line

For importers, the message is clear: every U.S. shipment in the affected sectors must now carry the surtax unless it qualifies for remission or falls under the auto sector’s one-year exemption. The delivered cost of those shipments will rise immediately, and the higher rates will stay in place until further notice.

The government has left the door open for relief, but the bar is high. Companies that rely on U.S. inputs will need to document their supply chains, quantify the economic harm and demonstrate that no alternative source exists. Those that succeed will pay only the underlying duty; those that do not will pay the full surtax on every shipment after September 8.

Sources

1. ↩ Canada imposes targeted counter-tariffs in response to U.S. tariffs https://www.canada.ca/en/department-finance/news/2026/08/canada-announces-targeted-countermeasures-and-substantive-support-for-workers-and-businesses-in-response-to-us-tariffs.html
2. ↩ List of U.S. products subject to counter-tariffs effective September 8, 2026 https://www.canada.ca/en/department-finance/news/2026/08/list-of-products-from-the-united-states-subject-to-counter-tariffs-effective-september-8-2026.html
3. ↩ U.S. Surtax Order (2026) https://www.cbsa-asfc.gc.ca/publications/cn-ad/cn26-23-eng.html
4. ↩ U.S. Products Subject to Canadian Counter Tariffs https://www.canada.ca/en/department-finance/programs/international-trade-finance-policy/canadas-response-us-tariffs/complete-list-us-products-subject-to-counter-tariffs.html
5. ↩ Canadian 25% Tariffs on US Steel, Aluminum, and Auto Imports https://www.cbsa-asfc.gc.ca/travel-voyage/tariffs-tarifs/index-eng.html
6. ↩ Process for Requesting Tariff Remission on U.S. Goods https://www.canada.ca/en/department-finance/programs/international-trade-finance-policy/process-requesting-remission-tariffs-that-apply-on-certain-goods-us.html
7. ↩ United States Surtax Remission Order (Motor Vehicles 2026) https://gazette.gc.ca/rp-pr/p2/2026/2026-04-08/html/si-tr13-eng.html
8. ↩ Customs Tariff 2026 https://www.cbsa-asfc.gc.ca/trade-commerce/tariff-tarif/2026/menu-eng.html
9. ↩ Customs Tariff Act (SC 1997, c. 36) https://laws-lois.justice.gc.ca/eng/acts/c-54.011/nifnev.html
10. ↩ 2026 Annual Report on Fighting Against Forced Labour and Trafficking in Canada https://fintrac-canafe.canada.ca/publications/fl-tf/fl-tf-eng
11. ↩ Public Consultation on Regulatory Approach under Bill C-35 https://international.canada.ca/en/global-affairs/consultations/trade/2026-07-27-forced-labour/gac-csba-paper