Tax & Trade Blog

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TARIFF RELIEF 101

CANADA'S REMISSION PROCESS MAY LESSEN BURDEN FOR BUSINESSES

Despite the fact that President Trump agreed to a further moratorium on his Trump Tariffs on Canadian goods until April 2, 2025, Canada’s initial round of Retaliatory Tariffs STILL remains in effect! (?)

Businesses affected by Canada’s Retaliatory Tariffs are likely seeking relief from their financial effects and the Canadian government has outlined a remission process that may provide such relief. 

Understanding what a remission order is and how one can request remission from Canadian imposed tariffs may provide businesses with a financial lifeline in the current climate of a turbulent trade war.

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CANADA INVESTIGATING US RENEWABLE DIESEL

CANADA BORDER SERVICES AGENCY INITIATES ANTI-DUMPING INVESTIGATION

On March 6, 2025, Canada announced the start of an anti-dumping investigation on "Renewable Diesel” (A.K.A. hydrogenation-derived renewable diesel or “HDRD”), originating in or exported from the United States of America (the "Renewable Diesel”).

Producers of "Renewable Diesel” – as well as large commodities traders involved in the movement of these goods from the US into the Canadian market-place – will want to get involved quickly in both the CBSA and CITT investigative processes.

This report reviews what that is the case, while providing some background on the mechanics of the expected investigation.

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STAFFING AGENCIES CAUGHT BY EHT!

EMPLOYER HEALTH TAX: THE SMALL TAX WITH THE BIG PUNCH!

As discussed here, our recent file experience demonstrates that provincial governments, like Ontario's Ministry of Finance (“MOF”), are ramping up audits for Employer Health Tax (“EHT”) liability.

One area of recent audit activity has been on Staffing Agencies, temporary employment and similar entities that procure workers for many Canadian and US businesses, contracting them out as effective out-sourced employees.

In an almost counter-intuitive result, recent assessments appear to be targeting Staffing Agencies for EHT due on remuneration paid to remote workers residing outside of the taxing province! (Think of an Ontario Staffing Agency assessed on the wages paid to remote workers residing in BC, with ABSOLUTELY NO connection to Ontario's or its health care services!)

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STATUTORY APPEAL OR JUDICIAL REVIEW?

THE DIFFERENCES & WHY THE FORMER MIGHT BE BETTER!

A recent decision by the Federal Court of Appeal (the “FCA”) has put into focus the distinction between a statutory right of appeal - which might be constrained in scope in some instances - and a judicial review application, which may offer an alternative avenue to deal with those constraints.

Of particular interest is the FCA’s discussion in Best Buy Canada Ltd. v. Canada (Border Services Agency) on why, overall, choosing to proceed solely with a statutory right of appeal might be more beneficial to taxpayers and importers.

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CHINESE SURTAX RELIEF IMPLEMENTED

 REMISSION AVAILABLE FOR SURTAXES ON CERTAIN CHINESE GOODS

As we blogged on previously here and here, the surtaxes imposed on certain Chinese goods imported into Canada have the potential to place undue burdens on Canadian businesses relying on those products. 

The recently implemented China Surtax Remission Order (2024) (the “Order”) provides much needed remission for Canadian businesses.  Continue reading this Report for more details.

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"RETALIATORY TARIFFS - STILL A BAD IDEA?

UNILATERAL FREE TRADE WOULD BE A BETTER ECONOMIC IDEA

 The trade relationship between the United States (“US”) and Canada has eroded with tensions devolving into a trade war.

As of today, the US imposed tariffs on Canadian goods appear to be "off again" until April 2^nd, but Canada's first round of "retaliation tariffs" are still "on" ("CT-R1").   That is strange.  Canada is "on" despite no current US tariffs to retaliate against?  Is Canada now the sole aggressor?

Should this on-again-off-again trade war continue to escalate, the US will likely impose even further reciprocal tariffs on Canadian goods, along with additional tariffs on Canadian steel and aluminum products, and timber, lumber and derivative products. In turn, Canada is planning to implement a more robust second round of tariffs targetting an additional $125 billion in US goods ("CT-R2").  

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US CBP AUDITS TARGETING CANADIANS?

CANADIAN EXPORTERS SUBJECT TO US CBP REVIEW, AUDIT & INVESTIGATION!

Current US vs. Canada trade tensions may be extending into US Customs & Border Protection ("CBP") audit, review and investigative activities – at least as they relate to exports to the US from Canada.

Viewed from the US perspective, these are "imported goods", and are required to be imported to the US correctly.

We have seen an uptick in US CBP inquiries, audits, reviews and investigations of Canadian businesses selling into the US, and that should be raising an alarm for all Canadian exporters.

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ONTARIO'S ELECTRICITY EXPORT TAX

PREMIER FORD ANNOUNCES EXPORT TAX, BUT WILL IT BE LEGAL?

On March 4, 2025, Ontario’s Premier Doug Ford announced further a retaliatory measure to the recently announced Trump tariffs, indicating that Ontario would apply a tax on exports of electricity to the United States (“US”). While that announcement might make many Ontarians (and Canadians) feel good about "taking a stance", one wonders whether Ontario has the legal powers to do what it says it is going to do.

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EHT FOR "RELATED" EMPLOYERS

GETTING THE FULL EXEMPTION AMOUNT

Employer Health Tax (“EHT”) is a part of our overall Indirect Tax practice, and a common EHT question we get is whether two corporations are “associated employers” for the tax.  Being associated is problematic, as it essentially makes each employer pay more than if they were unrelated. 

While this may seem like a straightforward bedrock question (is "Aco" associated with "Bco"), there is some confusion as to how the technical rules apply (even, it appears, at the Ontario Ministry of Finance (“MOF”) – at least based on some recent Ontario assessment positions that we have seen). 

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TARIFF UPDATE 101

TRUMP TARIFFS, CANADA'S COUNTERMEASURES TAKE EFFECT

The trade dispute between the United States (“US”) and Canada has now entered a new phase, as the US imposed 25 percent tariffs on Canadian goods and 10 percent tariffs on Canadian energy products on March 4, 2025 .  Canada responded in kind and implemented the first phase of its previously announced retaliatory countermeasures through the United States Surtax Order (2025-1) .  The list of targetted US origin goods remains the same as the prior list , but for the addition of 14 new items under Chapters 98 and 99 of the Customs Tariff Schedule, although these new items appear to be absent from a news release published by the Department of Finance Canada.

While Canadian businesses may have a 30-day reprieve from the threatened Trump and Canadian retaliatory tariffs, businesses should take the opportunity now to put plans in place to minimize the fallout should tariffs be enacted.  One avenue businesses can pursue to mitigate the impact of the tariffs is duty drawback.   

While President Trump’s Executive Order removes the option for American businesses to claim duty drawback, Canada Border Services Agency (“CBSA”) has confirmed that duty drawback remains available for Canadian businesses engaged in the import and subsequent export of goods, even if retaliatory tariffs come into force.

On February 10, 2025, the Canadian International Trade Tribunal (the “CITT”) issued a notice that it was beginning an expiry review in respect of certain Hot-Rolled Carbon Steel Plate and high-strength low-alloy steel plate originating in or exported from Brazil, Denmark, Indonesia, Italy, Japan, and South Korea (the “Subject Goods”).  On February 11, 2025, the Canada Border Services Agency (the “CBSA”) similarly gave notice of the initiation of their parallel expiry review investigation (in respect of “Hot-rolled carbon steel plate 7”).

More details on the technical definition of the Subject Goods can be found here.

In an interesting customs case continuing the Canada Border Service Agency’s (“CBSA”) assault on toy replica firearms, the Federal Court of Appeal (“FCA”) pointed out that allegations of bias leveled at the CBSA and the Canadian International Trade Tribunal (“CITT”) during the appeal process are serious and come with a “correspondingly heavy burden on the party alleging bias to prove the allegations”.  This is not good news for taxpayers and importers who often come to us feeling that the CBSA or the Canada Revenue Agency (“CRA”) has pre-judged their particular appeals, with the end-result in mind.

While the Trump tariffs have so far singled out allegedly unfair treatment of the US by Canada when it comes to border protection and the fentanyl crisis, the question remains if focus might shift to Canada’s supply management system.

A recent announcement from Canada Border Services Agency (“CBSA”) indicated Canada’s dry wheat quota had already been surpassed on January 12, mere weeks into the year.  This raises questions about the fairness of the tariff rate quota (“TRQ”) system for anyone but the largest Canadian importers who have the means to take advantage of it. 

After 35 years of practice in Tax and Trade, one thing I am sure of is that there are no “magic” answers for dealing with administrative delay by the Canada Revenue Agency (“CRA”) or the Canada Border Services Agency (“CBSA”).  

A recent decision of the Canadian International Trade Tribunal (“CITT”) underscores this problem, and leaves taxpayers and importers in some potentially hard situations when faced by governmental inaction.

The trade relationship between the United States (“US”) and Canada received a brief period of reprieve with the recent 30-day postponement of President Trump’s blanket tariffs and Canada’s retaliatory countermeasures.  Despite this intermission, the US and Canada appear set to face off again with tariffs and other countermeasures, much like their counterparts on the ice in the nations face off. 

President Trump has shown a willingness to continue his strategy of cajoling Canada into trade concessions, as evidenced by his February 10, 2025, executive order imposing a 25% tariff on all steel and aluminum imports entering the US.  While there may be legitimate questions about the legality of such tariffs, in this dispute where the refs are off the ice the size of the US economy is a major advantage.

Canada’s packaging and labelling laws are important for anyone selling or importing products for retail, and for consumers wishing to make informed choices about their purchases.  Navigating these laws can be difficult as they are often found in several places.  In this Report we will provide some examples of Canada’s diverse packaging and labelling laws.  

The Rules and Where to Find Them

The basic rules regarding product packaging and labelling in Canada can be found in the Consumer Packaging and Labelling Act, mandating that the following be present: