Tax & Trade Blog

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RETALIATORY TARIFF RELIEF IMPLEMENTED

REMISSION AVAILABLE FOR SURTAXES IMPOSED ON US GOODS

We had previously written that the Government of Canada (“Canada”) was planning to provide a remission process for its retaliatory tariffs here. 

On April 16, 2025, Canada implemented the United States Surtax Remission Order (2025) (the “Order”), providing an avenue for much needed relief from its three rounds of retaliatory tariffs.  Importers seeking to mitigate the effects of Canada’s retaliatory tariffs should seek legal advice from international trade counsel to determine their eligibility and assist with remission applications.

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USMCA ORIGIN: ANALYTICAL RULES

PLANNING FOR TRUMP TARIFFS

While President Trump has instituted a pause on his tariffs implemented through executive orders on March 6 and April 2, 2025, many Canadian businesses may be unaware that this reprieve  only extends to Canadian exports that qualify for preferential treatment under the United States Mexico Canada Agreement (“USMCA”). 

Accordingly, Canadian businesses need to place a premium on understanding and properly applying USMCA origin status.

This is the first of a two-part series on how one can claim USMCA preferential tariff treatment and focuses on the substantive origin analysis, following which the “formal” certification requirements must be met.

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CBSA INVESTIGATING CERTAIN STEEL WIRE

DUMPING OF CERTAIN CARBON AND ALLOY STEEL WIRE

• Reading from Vietnam and want a Vietnamese version? / Đọc bài viết bằng tiếng Việt tại đây

On April 22, 2025, the Canada Border Services Agency (“CBSA”) issued a Notice of Initiation of Investigation under the Special Import Measures Act (“SIMA”) in respect of the alleged dumping of certain carbon and alloy steel wire originating in or exported from China, Taiwan, India, Italy, Malaysia, Portugal, Spain, Thailand, Turkiye and Vietnam.  This investigation was prompted by a joint complaint filed by two manufacturers headquartered in Quebec. 

The goods under investigation are more specifically described as: 

Carbon or alloy steel wire, of round or other solid cross section, in nominal sizes up to and including 24.13 mm (0.950 inches) in diameter, whether or not coated or plated with zinc, zinc-aluminum alloy, or any other coating, including other base metals or polyvinyl chloride or other plastics (the “Subject Goods”).

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USMCA ORIGIN: CERTIFICATION RULES

PLANNING FOR TRUMP TARIFFS

While US President Trump has instituted a pause on his tariffs implemented through executives orders on March 6 and April 2, 2025, many Canadian businesses may be unaware that this reprieve only extends to Canadian exports that qualify for preferential tariff treatment under the United States Mexico Canada Agreement (“USMCA”).  Accordingly, Canadian businesses need to place a premium on USMCA origin status. 

This is the second of a two-part series on how one can claim USMCA preferential tariff treatment and focusses on the "formal" requirements for doing so, once the substantive origin analysis has been completed.

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CBSA PRELIMINARY FACTS: NO CIRCUMVENTION!

PRELIMINARY ASSESSMENT ON CONTAINER CHASSIS FROM VIETNAM

On April 9, 2025, the Canada Border Services Agency (“CBSA”) released a Statement of Essential Facts (“SEF”) related to its first-ever anti-circumvention investigation with respect to whether container chassis originating from Vietnam are circumventing Canada’s trade remedy measures on container chassis from China. 

This post provides an overview of the SEF and the CBSA’s Preliminary Assessment (see our earlier blog for the background on this).

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DUTY DRAWBACK UPDATE

DUTY DRAWBACK AN IMPORTANT OPTION IN CURRENT TRADE WAR

Since we last wrote about duty drawback, there have been significant developments in the trade war between Canada and the United States (“US”).  Canada has enacted three rounds of retaliatory tariffs, while the US has also imposed a number of different tariffs, with the most recent being President Trump’s reciprocal tariffs.

Amid this escalating trade war with no end in sight, businesses should consider duty drawback as a mechanism to mitigate the impact of tariffs and obtain legal advice to determine eligibility.

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SPECIAL SALES TAX RULES FOR DIRECT SELLERS

Sales tax in Canada can be complex – especially in provinces that do not participate in the GST/HST harmonization system. This complexity becomes even more pronounced in industries that do not follow the typical retail model, like direct selling.  This blog explains how Canadian sales tax systems apply to the direct selling industry, and how special rules can help businesses streamline compliance.

Background

Under Canada’s standard sales tax rules, any person making taxable supplies over a certain threshold must register for GST/HST and provincial sales tax (where applicable), collect tax from customers, and remit it to tax authorities.  In a typical retail setup, the business itself tracks its revenue and ensures compliance.  But in a direct selling network, each participant may independently meet those thresholds.  Requiring every participant to track earnings, register, charge tax, and file returns would create a massive administrative burden and could discourage participation.

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ANTI-DUMPING MEASURES ON VIETNAMESE GOODS

CORROSION-RESISTANT STEEL SHEETS

Canada has currently imposed eight (8) separate anti-dumping ("AD") and/or countervailing duty ("CVD") orders against products from Vietnam.  These measures effectively raise the price of targeted Vietnamese goods in the Canadian market, reducing their competitiveness in the Canadian marketplace.

Notably, one of such measures is the AD Order on Corrosion-Resistant Steel Sheets from Vietnam, issued under the Canadian International Trade Tribunal’s (the “CITT’s”) Order NQ-2019-002 (the “Order”).  However, this Order is set to expire in November 2025, which means that there may be an opportunity to advocate for their termination under the CITT’s "Sunset Review" process.

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AD/CV DUTIES: LOST IN THE TRANSLATION?

EXPORTERS TO THE US MAY HAVE LOST THEIR WAY RELYING ON CHINESE IMPORTS

We recently had a file come across our desk where a Canadian company was trading in Chinese products and marginally manufacturing them for export to the United States (US).  The company ultimately came under scrutiny from the United States Customs and Border Protection (US CBP) concerning potential duties.  But not the kind of "duties" that everyone is concerned with today (i.e., neither the "Trump Tariffs" or Canada's "Retaliatory Tariffs").

USCBP was concerned with Anti-Dumping and Countervailing Duties on the Chinese goods – totalling almost 200% based on the landed cost of the goods being exported to the US from Canada.

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AIRBNB HOMES SALES SUBJECT TO GST/HST

FCA CONFIRMS SALE OF AIRBNB PROPERTIES SUBJECT TO GST/HST

The Federal Court of Appeal (“FCA”) has recently confirmed a Tax Court of Canada (“TCC”), ruling that the sale of a property used for short term rentals on Airbnb are subject to Federal GST/HST.

In the short term, this decision will increase the cost of properties at a time when real estate prices are already deflated across Canada.  We should expect to see that depreciation hit condominiums.

With proper planning, this tax consequence (i.e., GST/HST applied to the sale of Airbnb properties) can be ameliorated, but experienced GST/HST counsel will be required.

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TRUMP TARIFFS & CANADIAN MADE CARS

HARD TIMES REVING UP FOR CANADIAN AUTOMOTIVE SECTOR

On Wednesday March 25^th, the President signed a proclamation which invoked s. 232 of the Trade Expansion Act of 1962, s. 604 of the Trade Act of 1974 and Section 301 title 3 of the U.S. Code.  This new Executive Order has imposed a 25% tariff on imports of automobiles and certain automobile parts. 

What is a tariff?

A tariff is a duty imposed on the import of goods into a country, usually at a stated percentage, with the importer charged the corresponding amount based on the "value for duty" of the good.  A 25% tariff on a $50,000 car is $12,500.  Tariffs, if paid by a wholesaler or retainer are usually passed on down the supply chain and borne by the final consumer.  In that sense, a tariff functions like a tax; the government imposes a price on goods making those goods more expensive.  The hope is that by increasing the price of foreign goods, citizens will purchase homegrown alternatives.

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RENEWED DUMPING DUTIES ON WINDOW WALLS

CITT CONCLUDES EXPIRY REVIEW ON CHINESE "UNITIZED WALL MODULES"

On March 19, 2025, the Canadian International Trade Tribunal (the “CITT”) announced an Order in Expiry Review RR-2024-001 (the “Order”), continuing its finding of material injury in respect of the dumping of Unitized Wall Modules originating in or exported from the People’s Republic of China (the “Subject Goods”). These goods are used in “curtainwall” or “window wall” systems for the exterior of multi-story buildings.

The Subject Goods

The Subject Goods are defined as:

Unitized wall modules, with or without infill, including fully assembled frames, with or without fasteners, trims, cover caps, window operators, gaskets, load transfer bars, sunshades and anchor assemblies; excluding non-unitized building envelope systems such as stick systems and point-fixing systems originating in/or exported from the People's Republic of China.

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CBSA INVESTIGATING "PET" RESIN AGAIN

POLYETHYLENE TEREPHTHALATE ("PET") RESIN FROM CHINA & PAKISTAN

On March 19, 2025, the Canada Border Services Agency (“CBSA”) issued a Notice of Initiation of Investigation under the Special Import Measures Act (“SIMA”) in respect of the alleged dumping polyethylene terephthalate (“PET”) resin originating in or exported from the People’s Republic of China and the Islamic Republic of Pakistan, and the subsidizing of PET resin originating in or exported from China.   This investigation was prompted by a manufacturer of similar goods in Quebec.

The goods under investigation are more specifically described as: 

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INTERPRETATION ACT - FRIEND & FOE?

FCA RULING CONFIRMS INTERPRETATION ACT CUTS BOTH WAYS FOR TIME DEADLINES

A recent decision of the Federal Court of Appeal, Canada v. Csak, 2025 FCA 60, underscores that the federal Interpretation Act (the “Act”) rules concerning the computation of time for deadlines are complicated, and can both help and harm taxpayers depending on the circumstances.

Taxpayers will need legal advice to determine how the Act’s computation of time rules intersect with various deadlines under the Excise Tax Act (“ETA”) and other federal legislation.  How that intersection plays out may impact taxpayers’ rights.

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NOVA SCOTIA SET TO REDUCE HST RATE

TRANSITIONAL AND PLACE OF SUPPLY RULES MAY AFFECT TAXPAYERS

On April 1, 2025, the Province of Nova Scotia is set to decrease their harmonized sales tax (“HST”) rate by 1 percentage point, resulting in a combined GST/HST rate of 14 percent in the province.  The reduction will put more money in the pockets of Nova Scotians, but individuals and businesses need to be aware of the complex Transitional Rules and Excise Tax Act (“ETA”) place of supply rules to determine to the applicable rate of HST on their transactions.

The Nova Scotia HST Reduction – Background

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TAXATION OF THE INDIGENOUS: COMPLICATED!

MYRIAD OF CANADIAN TAX & DUTY LAWS & OUR INDIGENOUS PEOPLES

One of the more complicated areas of tax and trade law in Canada lies in the intersection of these rules with Canada’s Indigenous Peoples, and their historic rights under sections 87 to 89 of the Indian Act (“the Act”).  A recent case from the Canadian International Trade Tribunal (“CITT”) underscores that point in the context of import obligations.

The Indian Act & Customs Duties

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AUTOMOTIVE REPORT: TARIFF HEADING 9966

CBSA'S VERIFICATION AUDITS TARGET RESTORATION INDUSTRY

A good part of our Tax and Trade practice involves advising Clients in the Automotive Industry on matters involving the application of Canadian taxation and customs duties to motor vehicles and parts.

Recently, we have seen an increase in audits and assessment of automotive restoration businesses, which seem to be currently targeted by the Canada Border Services Agency (“CBSA”).

One focal point seems to be the application of Tariff Concessionary Item 9966.00.00 (“Concessionary Code 9966”), which allows for the duty-free importation of certain vintage vehicles and repair parts.

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TARIFF WAR - ROUND 2

CANADA IMPOSES TARIFFS ON US STEEL AND ALUMINUM

The trade war between Canada and the United States (“US”) has taken a further turn for the worse. On March 12, 2025, President Trump imposed 25 percent tariffs on Canadian steel and aluminum products. Canada has now retaliated in kind, enacting the United States Surtax Order (Steel and Aluminum 2025) , which targets a wide list of US steel and aluminum products with a 25 percent surtax (the “Steel & Aluminum Surtax”). Businesses seeking to understand the scope of the Steel & Aluminum Surtax and mitigate its effects will require assistance from experienced International Trade counsel.

A Brief Review

President Trump, through an executive order on February 11, 2025, previously announced that 25 percent tariffs would be imposed on Canadian steel and aluminum products. 

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A SHOCK TO ONTARIO'S ELECTRICITY EXPORT TAX

PRESIDENT TRUMP VOWS TARIFF RESPONSE, ONTARIO SUSPENDS TAX

As we have previously written about here, there is suggestion that Ontario’s electricity export tax (the “export tax”) may lack constitutional authority to be imposed as a retaliatory measure to the United States’ (“US”) recent tariffs on Canadian goods.  Despite its questionable legality, Premier Ford imposed the export tax on March 10, 2025.  In response, President Trump indicated the US would increase its tariffs on Canadian steel and aluminum to 50 percent on March 12, 2025, which prompted Premier Ford to suspend the export tax shortly thereafter.

In this instance, it appears that Premier Ford’s export tax was a bad idea, much like we suggested here concerning Canada’s second round of retaliatory tariffs.  Accordingly, it might make little sense – both in economic theory and practical terms – to “enflame” the situation further with retaliatory measures when the US is an economic giant whose response can cripple the Canadian economy.

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COMPETITION BUREAU'S BROAD POWERS

FEDERAL COURT OF APPEAL DECISION IS A USEFUL REMINDER OF BASIC PRINCIPLES

On February 12, 2025 the Federal Court of Appeal (“FCA”) issued a decision upholding the Federal Court (“FC”) decision in Empire Company Limited and Sobeys Inc. v. the Attorney General of Canada (2025 FCA 34).  The case dealt with an application for judicial review of a decision of the Commissioner of Competition to commence an inquiry under the Competition Act (the “Act”, the same legislation which defines permissible multi-level marketing plans and illegal pyramid selling schemes in Canada). 

Accordingly, the case serves as a reminder of several principles regarding the Competition Bureau that are relevant to direct selling companies.