Countering The Countermeasures Mitigation Strategies For Importers

Since July 1, 2018, Canada has imposed 25% and 10% ad valorem surtaxes on the importation of a wide variety of U.S. "originating" goods. Canadian and non-resident importers have been wondering what they can do to avoid the application of the countermeasures to their importations. This blog post provides an overview of options, however, it is no replacement for targeted legal advice. If you are an importer affected by the countermeasures, please contact us to determine how these remedies may apply to your business.

For background on the Canada-U.S. trade dispute, see our previous blog posts on Canada's response to U.S. steel and aluminum tariffs and final countermeasures imposed.

1. Are You Correctly Classifying Your Goods?

   The countermeasures are highly targeted, and in many cases identify affected products at the eight-digit tariff item level. Tariff classification is often a complex exercise, which requires legal analysis informed by the General Rules for the Interpretation of the Harmonized System, Canadian rules, relevant legal notes, and jurisprudence. If there is a chance that you have incorrectly classified your goods and that an alternative tariff classification is available that is not subject to the surtax measures, consider exploring that possibility.

   Moving to a tariff classification that does not attract surtaxes may lead to a change in application of regular customs duties, upward or downward, or may have no effect. Corrections of tariff classification that result in more duties being payable or that are revenue-neutral must be made within 90 days of an importer having "reason to believe" that the tariff classification made at the time of entry was incorrect. For corrections resulting in a refund, section 74 of the Customs Act permits the importer to choose to file a refund claim up to four years after the date of accounting for the imported goods.

2. Are Your Goods U.S. "Originating"?

   The countermeasures are applied to goods that "originate" in the United States as defined by the Determination of Country of Origin for the Purposes of Marking Goods (NAFTA Countries) Regulations (the "Marking Regulations"). Rules of origin for marking purposes are commonly broader than the rules that determine the origin of goods for preferential tariff purposes. For this reason, some importers may find themselves in the unenviable position of (i) not benefiting from NAFTA or other preferential tariff treatment because they do not satisfy the...