On May 31, 2018, US Commerce Secretary Wilbur Ross announced that the United States will impose, starting June 1, 2018, a 25% tariff on imports of certain steel products, and a 10% tariff on imports of certain aluminum products, from Canada (US tariffs).
Canada intends to counter these US tariffs with surtaxes or similar trade-restrictive countermeasures on US-origin imports of up to CA $16.6 billion, which is proportionate to the 2017 value of Canadian exports affected by these US tariffs.1 The Canadian government will also consider further measures.
The proposed countermeasures will come into effect on July 1, 2018, and will remain in effect until the United States rescinds their new tariffs. The Canadian government is seeking comments from interested parties until June 15, 2018.
In March 2018, the United States began imposing tariffs on imports of certain steel and aluminum products, citing reasons relating to “national security,” but provided exemptions for Canada and Mexico. The exemptions were to expire on June 1, 2018.
The Canadian government tried to reach a mutually beneficial resolution. However, with negotiations for the North American Free Trade Agreement (NAFTA) going nowhere, it appears that the United States has decided to take a hardline approach with Canada.
As a result, Canada has proposed a financially proportionate response to the US tariffs of up to CA $16.6 billion dollars. They have listed the affected goods in two tables, which are available on the Department of Finance’s website.2 The proposed duties on imported goods listed in Table 1 are 25%, and 10% on those goods listed in Table 2.
Table 1 is available in the Department of Finance’s May 31, 2018 Notice.3
Products included in Table 1 and subject to the 25% proposed tariffs primarily include iron and steel products found in tariff headings 72.06 to 73.04.
Table 2 is available in the Department of Finance’s May 31, 2018 Notice.4
Table 2 primarily covers the difference between the amount of the tariffs imposed on goods listed in Table 1 and the total 2017 value of Canadian exports affected by the US tariffs.
The goods listed in Table 2 range from yogurt in Chapter 4 of the Customs Tariff, to other food or beverage products found in Chapters 9, and 16 – 22.
Other affected goods are found in the following chapters of the Customs Tariff:
Canadian importers and exporters should prepare for the anticipated changes when the countermeasures become effective July 1, 2018.
Furthermore, interested parties have until June 15, 2018, to make their concerns known to the Canadian government before the implementation of the proposed tariffs on US-origin imports.
PwC can work with your company to:
1. “Notice of intent to impose countermeasures action against the United States in response to tariffs on Canadian steel and aluminum products,” Department of Finance Canada (May 31, 2018).
2. See note 1.
3. See note 1.
4. See note 1.
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