Canada-United States Tariffs: Implications and Considerations for Retailers
February 2, 2025On Saturday, February 1, 2025, President Donald Trump used his powers under the International Emergency Economic Powers Act (IEEPA) to impose a 25% tariff on all Canadian imports except petroleum, which will be subject to a 10% tariff. These tariffs will take effect at 12:01am on Tuesday, February 4, 2025.
Canada announced its own 25% counter-tariffs on $30B worth of U.S. goods which will also take effect on Tuesday, February 4, 2025. This initial list of goods will be supplemented by $125B worth of additional goods to be tariffed at the same 25% rate. These additional goods will be subject to a 21-day consultation period in order for affected businesses to prepare or to make their case for exclusions.
The Canadian government announced it may use additional non-tariff measures (such as limiting exports of critical minerals to the U.S.) to apply pressure on the U.S.. They also signalled their intention to aid workers and businesses with emergency relief, however details have yet to be released.
Finally, Mexico and China were also targeted by these U.S. tariff measures at the rate of 25% and 10% respectively. Mexico has since responded with their own counter-tariffs while China has said it will take the matter to the World Trade Organization.
Implications for Retailers
- Exporting goods to the U.S.
Any Canadian retailer selling goods into the United States will have their goods tariffed at a rate of 25%. This tariff is paid by the customer in the United States. The U.S. tariff measure captures all goods. Only Canadian oil exports have been given a lesser rate of 10%.
The White House Executive Order contains more detailed technical information: Imposing Duties to Address the Flow of Illicit Drugs Across our Northern Border
- Importing goods from the U.S. into Canada
Any Canadian retailer importing counter-tariffed goods into Canada from the United States will now have to pay a 25% tariff on the value of those goods. Unlike the U.S. tariffs, Canada’s tariffs are only applied to goods on the list.
Please note there are other considerations surrounding definitions and transportation of tariffed goods. For example, the surtax will not apply to U.S. goods that are in transit to Canada on the day on which the surtax comes into force. Full details on all these rules here: Customs Notice 25-03: United States Surtax Order (2025)
A counter-tariff remission process has also been rolled out by Finance Canada. Canadian businesses can request exceptional relief from the tariffs that are imposed as part of Canada’s response to the U.S. Details can be found here: Process for requesting remission of tariffs that apply on certain goods from the U.S.
- Canadian Provincial Actions
Retailers should be aware that individual provinces have also enacted retaliatory measures for their jurisdictions. RCC is compiling a list of all these individual measures and will distribute that once available. In the meantime, retailers should be aware that their province may have additional limits being placed on certain items.
Additional resources
RCC Action and Analysis
The scale of the U.S. tariffs and Canadian counter-tariffs are such that a lot of damage will be done to the retail sectors on both sides of the border. If the tariffs take effect and remain in place for a long period of time, we can expect severe economic repercussions and indeed a recession.
Retail Council of Canada is actively involved on your behalf with government both as an important voice in Canada’s efforts vis-à-vis the United States, but also in advocating for support programs for retailers impacted by this tariff situation. To help us advocate for you, it will be important to share impacts on your businesses.
We also want to hear from you on which items in Canada’s counter-tariff lists are a particular problem (i.e., no other sources of supply, detrimental to your business’ continued viability, etc).
RCC will be submitting industry feedback to the consultation and will highlight specific injurious instances. You can provide these examples directly to Matt Poirier at mpoirier@retailcouncil.org.
Contact Matt Poirier, Vice President, Government Relations at mpoirier@retailcouncil.org for more information.