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Tariffs and Trade Policy Resource Centre
Reduce uncertainty. Inform strategy. Protect value.
Companies operating in North America are grappling with a new trade environment. Court decisions overturn tariff policies. Temporary import surcharges replace permanent ones. Evolving national security measures reshape what’s actually in effect. Rapid shifts in legal authority and policy tools have created new cost exposures, refund considerations, and compliance challenges for Canadian businesses selling into or operating in the US.
Tariffs are no longer a static cost to manage. They’re part of a dynamic policy environment that can change quickly, creating downstream impacts across pricing, supply chains, tax, and financial reporting. Companies that proactively align trade compliance, supply chain strategy, tax planning, and contract management will be better positioned to manage risk, capture recovery opportunities, and compete amid ongoing volatility.
How do US tariffs affect Canadian businesses?
Tax Insights: US imposes 50% tariffs on Canadian dairy, alcoholic beverages, motor vehicles and various other goods
August 25, 2026 update: On August 22, 2026, the additional 50% tariff (under section 338 of the US Tariff Act of 1930 and discussed in our Tax Insights) became effective for covered Canadian origin goods.
Key US trade policy developments affecting Canadian businesses when exporting to the US
Section 338 Tariffs on Canadian Goods
In July 2026, the United States invoked Section 338 of the US Tariff Act of 1930 to impose an additional 50% tariff on certain Canadian-origin goods, including dairy products, alcoholic beverages, motor vehicles and a broader range of products identified in the associated proclamations. The tariffs apply in addition to other applicable duties and generally apply regardless of whether the goods qualify for preferential treatment under CUSMA. Section 338 has rarely been used in modern trade policy and represents a significant expansion of trade measures affecting Canada-US commerce.
Why this matters
Canadian exporters and US importers may face significant increases in landed costs and supply chain disruption as a result of the additional 50% duty.
CUSMA qualification does not provide relief from Section 338 tariffs, requiring businesses to reassess pricing, sourcing, contractual arrangements and profitability models.
Companies should evaluate tariff classification, exclusions, customs valuation, transfer pricing considerations, and strategies to preserve potential protest and refund rights as the legal and regulatory landscape continues to evolve.
US Supreme Court decision invalidating IEEPA tariffs
In February 2026, the US Supreme Court ruled that the International Emergency Economic Powers Act (IEEPA) doesn’t authorize the president to impose tariffs without clear congressional approval. As a result, tariffs imposed under IEEPA in 2025 and early 2026 were invalidated. This eliminated a major source of executive-driven tariff authority and triggered significant refund considerations for affected importers.
Why this matters
- Many Canadian exporters and their US customers were affected by IEEPA-based tariffs
- For companies, the focus has shifted from tariff mitigation to refund recovery, cash-flow timing, transfer pricing, and financial statement implications
- This ruling increases the importance of understanding importer-of-record status and contractual risk allocation
IEEPA tariff refunds: CBP process
Following the Supreme Court’s decision, the US Court of International Trade ordered US Customs and Border Protection (CBP) to remove IEEPA tariffs from unliquidated entries and to reliquidate eligible liquidated entries without regard to IEEPA duties. CBP is processing refunds administratively through its Consolidated Administration and Processing of Entries (CAPE) system.
Why this matters
- Refunds are issued to the importer of record, which may be a US affiliate or customer—not the Canadian exporter
- Companies may need to support their customers by providing documentation, assessing pricing impacts, and revisiting commercial arrangements
- Recovery timing, interest entitlement, transfer pricing implications, and accounting treatment each require attention
Temporary replacement tariffs under Section 122 of the Trade Act
In response to the invalidation of IEEPA tariffs, the US introduced a temporary import surcharge under Section 122 of the Trade Act of 1974. Key components of this measure include a temporary, across‑the‑board import surcharge of up to 10% and exemptions for goods qualifying under the Canada‑United States‑Mexico Agreement (CUSMA). Additionally, the measure ends the combination (or “stacking”) of additional tariffs on goods subject to Section 232 tariffs. These tariffs apply for up to 150 days (unless extended by Congress) and are subject to important exemptions.
Why this matters
Short‑term tariffs increase pricing uncertainty and planning complexity
CUSMA origin qualification determines eligibility for the tariff exemption
Companies are managing overlapping trade measures with different legal bases and timelines
Expansion and recalibration of Section 232 tariffs on steel, aluminum, and copper
Section 232 tariffs now apply to the full customs value of covered products rather than only the metal content. Coverage of derivative products has expanded, with tiered rates based on sourcing and composition.
Why this matters
Canadian manufacturers, automotive suppliers, industrial companies, defence contractors, and energy firms face increased tariff exposure
Classification, valuation, and origin determinations are more consequential
Supply chain and sourcing decisions may require reassessment
De minimis suspension and US border treatment
Despite the IEEPA ruling, the suspension of US de minimis treatment continues, increasing costs and compliance burdens for companies managing low-value shipments, e-commerce operations, and direct‑to‑consumer sales.
Why this matters
Higher landed costs for low‑value shipments
Increased customs processing and compliance requirements
E-commerce and fulfillment strategies reliant on de minimis treatment may require reassessment
2026 CUSMA review and evolving trade relationship dynamics
Canada, the United States, and Mexico are engaged in the formal review process of CUSMA. While the agreement remains in force, the review could change how key provisions are interpreted, enforced, and prioritized—particularly in areas such as rules of origin, labour and environmental commitments, dispute settlement, and trade remedies.
Why this matters
Outcomes from the CUSMA review could affect Canadian companies’ market access, their eligibility for preferential tariffs, and compliance expectations
Increased scrutiny or changes in enforcement will require greater attention to origin qualification, documentation, and governance
The review adds another layer of uncertainty alongside tariffs and other trade measures, reinforcing the value of scenario‑based planning over relying on a single forecast
Build your trade and tariff strategy: How PwC Canada can help
PwC Canada’s Customs and International Trade specialists work closely with tax, supply chain, deals, and economics teams to help companies navigate today’s rapidly evolving trade environment—from exposure assessment and refund recovery to supply chain redesign and long-term strategic planning.
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