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CANADA'S BANDAID APPROACH TO TARIFFS

EXTENSION OF REMISSION SHOULD BE REPLACED BY REMOVAL OF ALL TARIFFS

While Prime Minister Carney was recently quoted saying there will be no tariffs imposed on US imports, Canada’s remaining tariffs (technically “surtaxes”) on US steel and aluminum and some automotive goods continue to be source of significant economy pain for the remaining industrial businesses left in Canada’s economy.

Even with the recent announcement from the Department of Finance Canada (“DOF”) that remission relief from the tariffs will be extended an additional two months and enhanced, the best course of action in the circumstances would be to tear the “bandaid” right off and eliminate ALL retaliatory tariffs in one fell-swoop.

Remission: Government Tax Policy Fraught With Problems

While extension and enhancement of DOF’s Remission Order is welcomed, how the relief has been crafted and administered creates impediments for importers attempting to access the remedy.

For one, for the remaining products still requiring remission under the category for the manufacture of goods in Canada, that category remains limited to “goods” and not infrastructure.  This is confusing from a tax policy standpoint, especially when taking into account Prime Minister Carrney’s attempt to stimulate the economy with a Canada-first emphasis, and its heavy focus on infrastructure projects.

The Canada Border Service Agency’s (“CBSA”) administration of the Remission Order is also equally puzzling.  Notably, again for the category of manufacturer’s remission, the CBSA is rejecting some remission applications made by up-stream importers who merely import and distribute steel and aluminum products, without manufacturing goods themselves.  We would highlight that all of this raw steel and aluminum is  going into the manufacturing or production of something rather than being imported to be put on display in a museum. It all ought to be free of retaliatory tariffs!

What Changed: Amendments to the Remission Order

Canadian businesses had been staring down the  October 16^th expiry date for manufacturer’s remission, many anxiously wondering if our DOF would extend remission past that date.  The next day, however, the DOF circulated a yet to be published Order in Council, amending the Remission Order to extend much needed relief for businesses.

Additional steel and aluminum products have also been added to the Remission Order.  Where an importer’s goods have not been added to the Remission Order, they may still apply for manufacture’s remission until  December 15, 2025, at which point a further amendment will be needed to extend the deadline again.

Recommended Path Forward

A system that taxes domestic industry and then selectively “gives it back” is not sound economic stewardship. It projects political toughness abroad while demanding costly compliance at home, all in the name of performative politics.

Indeed, if the Canadian government really wants to help Canadians, it needs drop ALL of its tariffs immediately and grant remission for everything paid since March.  Prime Minister Carney also needs to focus on addressing President's Trump's current grievances with Canada if he really wants to put an end to this trade dispute.

Takeaways

Canadians have suffered enough during this protracted trade war—and largely at the hands of Canada’s retaliatory tariffs. Rip that bandaid off and be rid of retaliatory tariffs once and for all and deal with US grievances head on!

For help with the US Tariffs and Remission, please click here.

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