BONDED WAREHOUSES DO NOT STOP TRQ CLOCK

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BONDED WAREHOUSES DO NOT STOP TRQ CLOCK

CBSA: STEEL IMPORTERS NEED UPFRONT QUOTA BEFORE IMPORT!

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We have previously written about Canada’s Steel Tariff Rate Quota (“TRQ”) regime here and here. For Canadian importers of steel into Canada, not originating from either the US or Mexico, the name of the game has recently been to ensure that all imports fall within Canada’s applicable TRQ regime.

This basically requires (1) ensuring that one’s imports stay within Canada’s daily-published TRQ quotas and (2) obtaining a shipment-specific import permit. If both requirements are met, importers can avoid the substantial 50% surtax which can dramatically increase landed cost of their imported steel.

The CBSA has recently underlined that Customs Bonded Warehouses (CBWs”) CANNOT be used in order to stop the TRQ clock or facilitate after-the-fact import permits.

TRQ Regime for Steel

As most readers will be aware, Canada first imposed its steel TRQ regime on June 27, 2025, initially targeting steel mill products imported from countries with which Canada did not have a Free Trade Agreement (“FTA”). The measures were a response to concerns that US steel tariffs, combined with continuing global steel overcapacity, could result in significant volumes of foreign steel being imported into the Canadian market. The TRQ regime has since been expanded to steel from ALL countries, other than the United States and Mexico.

Notably, the TRQ system does not prohibit steel imports once the applicable quota has been exhausted, BUT DOES apply a punitive 50% surtax to “over-access” imports.

Shipment-Specific Import Permits

A key component of this TRQ regime is the requirement to obtain shipment-specific import permits. These permits allow Global Affairs Canada (“GAC”) to administer and monitor available TRQ access (i.e., the right to import without the 50% over-access surtax), which is generally allocated on a first-come, first-served basis.

Bonded Warehouses Not a Solution

Apparently in response to certain importer strategies, CBSA has recently released Customs Notice 26-20 (“CN 26-20”), underlining its view that CBWs will not allow for workarounds in this area. Prior to the issuance of CN 26-20, some might have assumed that CBWs could be employed while waiting for an applicable import permit or could be used to delay the application of over-access surtaxes.

CN 26-20 now clarifies that this strategy will not work, and that placing steel into a CBW neither stops the TRQ clock nor allows for after-the-fact import permits. This “clarification” is significant because ordinarily one of the attractions of a CBW is precisely that: deferral of duties and taxes while imported goods remain in bond. CN 26-20 is clear warning to steel importers not to assume that this ordinary duty-deferral concept allows a deferral of TRQ status.

Whether this is a position that would ultimately hold before the Canadian International Trade Tribunal (“CITT”) is a bit up in the air. (CBSA’s administrative pronouncement is one thing; whether the governing legislation actually produces that result is another.)

Takeaways

When it comes to Canada’s TRQ regime for steel imported elsewhere than the US and Mexico, CBSA has reiterated that there is no substitute for planning imports upfront, while also underlining that use of CBWs will not stop the TRQ clock. Steel importers looking to properly structure imports in the current trade war environment will generally benefit from experienced Customs & Trade Counsel.

For help with TRQ planning or remission, please click here.