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Canada Announces U.S. Goods to be Hit with Retaliatory Tariffs as of July 1

Monday, July 02, 2018
Sandler, Travis & Rosenberg Trade Report

Canada has announced the U.S. steel, aluminum, and other products that will be subject to “reciprocal surtaxes” when imported into Canada beginning July 1. One list, comprising steel products classified under various subheadings in Chapter 72, will be subject to an additional 25 percent duty. Two other lists, comprising aluminum products as well as other goods such as food products, mattresses, lawn mowers, dishwashers, boats, and various consumer goods, will be subject to an additional 10 percent duty.

The Canadian tariffs are being imposed in retaliation for, and will remain in place until the elimination of, the higher duties the U.S. imposed on steel and aluminum products from Canada as of June 1. Those duties were levied under a U.S. law that allows imports to be restricted if the president determines doing so is necessary to protect U.S. national security, but Canada’s Department of Finance said June 29 that it is “inconceivable and completely unacceptable to view any trade with Canada as a national security threat to the United States.” A department press release added that the U.S. has a US$2 billion annual trade surplus in iron and steel products with Canada, which buys 50 percent of all U.S. exports of such products.

(Click here for ST&R’s web page providing information on the U.S. tariffs imposed under Section 232 and Section 301 as well as the retaliatory tariffs trading partners are levying on U.S. goods.)

Canada’s surtaxes will only apply to goods that originate in the U.S.; i.e., those eligible to be marked as goods of the U.S. in accordance with the NAFTA marking rules. The burden of proof that goods are not considered originating in the U.S. lies with the importer.

Canada also announced that it will make available up to $2 billion to “defend and protect the interests of Canadian workers and businesses in the steel, aluminum and manufacturing industries,” including $50 million over five years to help Canadian companies diversify their exports to take advantage of new trade agreements such as CETA (with the European Union) and CPTPP (with other Asia-Pacific countries).

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