New 35–40% Tariffs on Canadian Goods Take Effect August 1
Starting August 1, 2025, U.S. importers will face steep new tariffs on a broad range of products from Canada. Under updated guidance from U.S. Customs and Border Protection (CBP), all imports from Canada—unless specifically excluded—will now be subject to a 35% ad valorem tariff, with an even higher 40% duty rate for goods found to have been transshipped to evade the new rules.
This marks a significant escalation in trade tensions across the U.S.-Canada border. The policy stems from Executive Order 14193, first issued in February, and subsequently amended four times, most recently on July 31, 2025. While initially focused on a narrow subset of goods, the scope has now widened dramatically.
Which Products Are Affected?
Virtually all Canadian-origin imports are affected—unless they fall under one of a few exempt headings (9903.01.11 to 9903.01.15) or are personal-use items brought into the country in a traveler’s baggage.
For everything else, the new duty line is HTSUS 9903.01.10, which applies a blanket 35% additional duty on top of existing rates. This includes not only raw materials and industrial inputs, but also finished consumer goods that form a major part of U.S.-Canada trade.
Critically, this rate replaces the prior 25% tariff under the original version of the executive order. Importers who previously adjusted for that rate will need to revisit their landed cost calculations and pricing models immediately.
Caveat: Transshipment Penalties
CBP is also cracking down on transshipment schemes and relabeling to disguise Canadian origin. If CBP determines that a product has been transshipped to evade the duties, the importer will be directed to enter the goods under HTSUS 9903.01.16, which imposes a 40% duty rate. That’s a major risk for companies using complicated supply chains or overseas consolidation hubs.
CBP has not yet specified exactly what criteria it will use to determine whether transshipment has occurred, but importers should expect aggressive enforcement—particularly where documentation is inconsistent or country-of-origin declarations raise red flags.
Conclusion
Going forward make sure documentation is consistent, verifiable, and available for CBP review; transshipment enforcement will likely involve Requests for Information (CF-28s) or full-blown audits. Prompt and accurate response to these investigations is critical.
If you have questions about how this policy could affect your importing activities or customs compliance, please contact our office for assistance. As new tariff regulations continue to evolve, navigating these changes requires experienced legal counsel. At Liang + Mooney, PLLC, our seasoned tariff lawyers can answer your questions and concerns with sophisticated legal solutions. If you seek strategic counsel and insight into how these changes could affect your operations, we invite you to contact us to schedule a consultation.