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CANADA EXTENDING SURTAX REGIMES

DOF CONFIRMS EXTENSIONS INCOMING ON STEEL SURTAXES & RELATED RELIEF

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A recent Department of Finance Canada (“DOF”) news release has confirmed that Canada will be extending certain steel surtaxes and horizontal tariff relief for imported steel goods. The putative aim behind these extensions is to “defend steel workers and industry against steel trade diversion” and “provide producers and importers with greater business predictability and longer-term certainty”.

In this Steel Industry Report, we review which surtaxes and remission categories are set to be extended in the near future.

Steel Tariff-Rate Quotas (“TRQ”) Extended One Year

Canada currently imposes a 50% surtax on imports of certain “classes” of steel goods exceeding specified quotas under the Surtax on the Importation of Certain Steel Goods (the “3P Surtax”), which we have previously discussed here.

The 3-P Surtax regime was set to expire on June 27, 2026, at the conclusion of its fourth quarterly period. The DOF has now confirmed that an extension will take place until June 27, 2027, with quota levels continuing to be based on the same criteria.

Possible Allocation-Based Approach?

The DOF also indicated that a move to an allocation-based approach for certain “classes” of steel goods under 3-P Surtax may be on the horizon. The Canadian government is expected to initiate engagement with stakeholders, such as producers and importers, to seek their views on this potential change, with a view to improving the 3-P Surtax regime.

Remission Extended for US Steel/Aluminum Surtax

With the United States Surtax Order (Steel and Aluminum 2025) (the “US Steel/Aluminum Surtax”) remaining in effect with no end in sight, certain categories of relief under the associated Remission Order are also being extended to June 30, 2027, as follows:

1. Steel and aluminum inputs to automotive and aerospace manufacturing;
2. Aluminum inputs to manufacturing and processing, food and beverage packaging, and agricultural production; and
3. Goods for use by public health, health care, public safety, and national security entities.

Exemptions Extended for Derivative Surtaxes

The DOF also indicated that “horizontal tariff relief” is being extended for “eligible steel products subject to derivative tariffs” to June 30, 2027. We understand this to mean that the exemptions from derivative surtax for goods used as inputs in automotive and aerospace manufacturing under ss. 2(d)-(e) of Steel Derivative Goods Surtax Order are what is actually being extended.

Takeaways

With the Canada-US trade war mid-way through its second year, an update to Canada’s various surtax and remission regimes was expected. Given the clarity provided by the DOF’s news release on this point, importers should now plan accordingly and contact Experienced International Trade Counsel for advice on how to take advantage of Canada’s remission opportunities!

For help with Canadian Surtaxes & Remission, please click here.