A CUSTOMS YEAR-END REVIEW
THE TRADE WAR & NOTABLE CASES IN 2025 YOU SHOULD KNOW ABOUT
What just happened to me! That is probably the sentiment of most people in customs and trade in Canada, after a frenetic 2025.
We present a year-in-review below, starting quite understandably with a high-point review of the Canada-US Trade War (the “Trade War”), followed by some other major developments that dominated customs in the Canadian context.
THE GREAT TRADE WAR OF 2025
In his election campaign a year earlier, President Trump promised tariffs as a tool to seek trade concessions and reshore key industries.
Many Canadians appear to have been surprised that he actually kept that promise – and he did so in spades!
While the scope of the US tariffs initially seemed daunting, a broad-based exemption for CUSMA-compliant goods enabled most Canadian products to continue to enter the US market at preferential duty-free rates – despite the many news items in the mainstream press to the contrary.
Where the US approach was really aimed appears to have been steel/aluminum production (including automotive production) which are the main industries the US has historically viewed of national economic importance. (One can imagine that in a shooting war, production capabilities in steel and aluminum would be important; and in WWII, ALL of the major automotive companies were utilized in the war effort). So like it or not for Canadians, these industries ARE strategically important for the US.
Also like it or not, tariffs seem to be an effective means of reshoring, and one need look no further than the Reagan-era tariffs and their effect in persuading Japanese automotive manufacturers to shift major production to the US.
In response, Canada took an "elbows up" strategy, retaliating with a number of tariffs (statutorily, “surtaxes”) targeting a host of general US products, steel/aluminum products and automotives – but largely hurting Canadian importers of those products. Unlike President Trump, Prime Minister Carney did not provide an exemption for CUMSA-compliant goods, with the only relief afforded to businesses for the majority of 2025 being discretionary remission applications until the repeal of a number of tariffs on September 1, 2025.
Much like the US, Canada’s retaliatory tariffs remaining after September 1st targeted US steel/aluminum and automotives.
The Great Tariff War of 2025 will likely spill over to 2026. Canada needs to accept this and begin dealing with US strategic interests in reshoring.
The 2025 Trade War remains fluid to date, and will likely spill over to 2026, with Canada recently enacting new global tariffs on steel derivative products (i.e., not just US-specific tariff but GLOBAL tariffs), taking effect on December 26, 2025. Merry Christmas!
Looking forward to 2026, it will be difficult to predict what President Trump might do in response, but further tariffs against any and all industries cannot be ruled out on both sides of the Trade War.
One thing Canada might think about doing in 2026 is addressing head on the strategic importance of US steel, aluminum and automotive capability, and seeing how we can best partner up to ensure that we are regarded as a safe and reliable partner in those industries for the US (i.e., a true ally).
FIVE NOTABLE CUSTOMS CASES FROM 2025
While there could be more, we canvas five (5) notable 2025 customs cases worth reviewing for the following reasons.
Medline Canada Corporation, AP-2022-004 and AP-2022-017
Medline sought refunds under s. 74(1)(f) of the Customs Act for duties paid on sterile rubber surgical gloves (the “Surgical Gloves”). Medline argued the Surgical Gloves were eligible for conditional duty relief under tariff item 9977.00.00 as “articles for use in” surgical/medical sciences.
The Canada Border Services Agency (“CBSA”) rejected Medline’s refund and redetermination requests under s. 60 CA, finding the Surgical Gloves did not meet the “for use in” criteria of HS code 9977.00.00, and Medline appealed to the Canadian International Trade Tribunal (“CITT”) pursuant to s. 67 CA.
Medline: CITT Explains the "for use" test for Tariff Classification Purposes.
The definition of “for use in” under s. 2(1) of the Customs Tariff (“CT”) requires goods be “wrought or incorporated into, or attached to” another good. As the Surgical Gloves were not wrought or incorporated into surgical instruments, the issue before the CITT was whether they were “attached.”
The CITT applied its two-prong test for attachment:
- Functional Connection: Goods functionally joined to the host goods.
- Physical Connection: Goods physically connected to the host goods.
The CITT easily found a functional connection (the Surgical Gloves reduce infection risk and improve tactile feedback for surgeons), and also rejected the CBSA's position that the “mere surface-level contact” could not satisfy the physical connection test.
In rejecting the CBSA's position on the physical connection test, the CITT held that attachment “need not be one of a purely physical nature” and is satisfied where there is a “real and effective connection” between the good and its host. In the CITT's view the act of holding a surgical instrument while wearing the Surgical Gloves was the "kind of connection envisaged by the expression ‘for use in.’”
This case is significant because the CITT’s interpretation may broaden access to conditional tariff relief, as “for use in” appears in literally hundreds of tariff items.
Relief may now be available even where physical integration is temporary or minimal, and perhaps even where there is no physical connection at all (i.e., strictly digital).
Atrium Innovations Inc., AP-2021-032
Atrium appealed the CBSA’s classification of its Fish Oil, CoQ10, and Ashwagandha products (the “Goods”) under s. 67 CA. Atrium sought classification under heading 30.04 as “medicaments,” attracting 0% duty-rate rather than the CBSA’s classification as “other food preparations” in heading 21.06, attracting 10.5% MFN duty.
The dispute was shaped by the 2019 amendments to the WCO Explanatory Notes (“2019 ENs”). The CBSA argued the 2019 ENs altered Canadian law by requiring proof of efficacy for classification under heading 30.04, making the Goods properly fall under heading 21.06. The CITT was therefore asked whether the 2019 ENs changed Canadian law and the proper classification of the Goods.
Before deciding the main issue, the CITT addressed whether its jurisdiction extended beyond the single transaction re-determined under s. 60 CA. The CITT rejected the CBSA’s narrow view, holding that its jurisdiction captured both explicit and implied CBSA decisions and was not confined to the specific importation referenced in the Minister’s decision. This allowed the CITT to consider the classification of the Goods beyond the specific appeals before the CITT.
On the merits of the case, the CITT found the Goods had therapeutic or prophylactic uses, fitting within heading 30.04. It declined to treat the 2019 ENs as binding on it. Instead, the CITT noted that the 2019 EN's did not amend the CT or overturn existing case law. Also crucially absent was any Order under s. 14(1) CT “to give effect to” WCO amendments. The CITT therefore concluded that the EN changes served only as interpretive aids rather than as modifications to Canadian customs law, and declined to follow them.
Atrium: WCO Explanatory Notes NOT Always Binding!
Atrium signals the CITT’s willingness to adopt a broader view of its jurisdiction. For importers, this suggests separate appeals for similar products may not always be necessary.
Atrium is also an example of the CITT establishing itself as a legal decision-maker, not governed by administrative bodies, notes or orders that have not themselves been given the force-of-law in Canada. The decision thus cautions against reliance on WCO Explanatory Notes (or other materials) that contradict settled Canadian jurisprudence – particularly where no Order exists under CT s. 14(1) implementing that position domestically.
Byrne v. Canada, 2025 FCA 30
The Applicant attempted to import a gas-powered airsoft pistol (the “Airsoft Pistol”). The CBSA determined it met the definition of a “replica firearm” under s. 84(1) of the Criminal Code and was prohibited from importation under s. 136(1) CT. The Airsoft Pistol was seized, and on an appeal under s. 67 CA, the CITT upheld the seizure.
The Applicant sought judicial review (“JR”) at the Federal Court of Appeal (“FCA”), arguing errors in the CITT’s factual findings and alleging bias.
The FCA dismissed the JR. The Court held that CITT’s factual findings—particularly those based on expert evidence—were entitled to significant deference. The Applicant argued their expert lacked adequate opportunity to examine the Airsoft Pistol, but the FCA found the Applicant had a reasonable opportunity and declined to take it.
On the allegation of bias, the FCA applied the “informed person” test, stressing that “substantial and cogent” evidence of bias was required and that “mere suspicion will not suffice.” The Applicant did not meet this burden as the FCA noted nothing in the record supported an allegation of bias.
Byrne: Allegations of Bias EXTREMELY Difficult to Make Out!
Byrne confirms that importers face steep obstacles when contesting CITT evidentiary findings, particularly with respect to matters where expert evidence is crucial piece of the factual matrix. It also reiterates the exceptionally high threshold for establishing bias. JR is not a venue to re-argue or marshal in new facts. The evidentiary record must be established early on during a s. 60 CA appeal.
Universal Ostrich Farms Inc. v. Canada, 2025 FCA 147
In a case that received recent national press coverage, Canadians learned a bit about the Canadian Food Inspection Agency ("CFIA") and its vast powers, and those in customs and trade saw how difficult discretionary decisions by government officials are to overturn.
At issue were a number of very sick birds on the Applicant’s ostrich farm, two of which had died from H5N1 avian influenza. The CFIA issued a Disposal Order under s. 48 of the Health of Animals Act (“HAA”), directing the destruction of the remaining 400 ostriches pursuant to the national Stamping-Out Policy (the “Policy”).
With no statutory right of appeal under the HAA, the Applicant's own ability to attempt to overturn the decision lied in bringing a Judicial Review application to the FCA (as defined, "JR"), arguing misapplication of the Policy and failure to consider evidence of flock recovery.
The FCA ultimately upheld the CFIA's decision, emphasizing that s. 48 HAA affords the CFIA wide discretion to order destruction of animals to control reportable diseases. The FCA also held the Policy was reasonable, scientifically grounded, and consistent with Canada’s international commitments.
Universal Ostrich: Government Discretionary Decisions DIFFICULT to overturn.
The Applicant’s request for an individualized exemption was also rejected, with the FCA reiterating that JR is not a mechanism for granting exceptions to government policy. Instead, JR ought to be regarded as a method for determining whether the decision falls within a range of reasonable outcomes. As the CFIA's decision bore the hallmarks of reasonableness, the FCA deferred to the CFIA.
Universal Ostrich reinforces the scope of the CFIA’s authority in animal-health and disease control matters. Courts will rarely disturb these decisions, even where economic loss may be substantial.
R v Livingstone, 2025 NBKB 198 (CanLII)
The importers were a testament of exactly what NOT to do when entering Canada after a long-term stay in Florida. While claimed to be within their exemptions, they attempted to import a number of purchases over their stated exemption limits – plus pepper spray, a stun gun, suspected marijuana, multiple loaded gun magazines, a 9mm Glock 9mm handgun, and two 9 mm Polymer80 handguns without serial numbers (all hidden within plastic panels of their van).
Faced with prosecution for an indictable offence (the highest form of criminal action in Canada), they brought Charter arguments in an attempt to evade prosecution.
The Court had none of it, and in convicting the pair, gave a law school course on what rights importers have at the border, whether presenting casual or commercial goods: not many.
Livingstone: CBSA has ULTIMATE Border Search Powers. Dot T's & Cross I's!
Notable points were as follows:
- Searches of persons and conveyances are broadly supported by CA, and are "part of a routine border screening" not triggering the Charter.
- Permissible searches and questions include x-rays, ion scans capable of detecting drugs, questions related to the contents of luggage, or the provenance of those contents, or questions directed at immigration status like marital or employment status, income, or the purpose of a trip, are not likely to involve "detention".
- Charter rights are engaged upon "Detention", but the line between routine investigation and Detention is not always bright. Obvious "Detention" includes strip searches, body cavity searches and “bedpan vigils”. Less obvious are questions amounting to coercive or adversarial interrogation, improper inducements, or the exertion of unfair pressure.
- Until a "Detention" occurs, no obligation exists on the part of CBSA to provide "standard cautions" or allow for independent legal advice.
The takeaway here is to cross all the t's and dot all the i's on import documentation, and get things right at the front end. And DO NOT try and import prohibited or restricted items on a concealed basis!
CBSA has incredible search rights at the border!
For assistance with Customs matters, please click here.
Download a PDF copy of this Blog here.