New Reciprocal Tariff on Canada

President Donald J. Trump issued a formal notification to Canada on July 10, advising that a reciprocal tariff of 35% will take effect August 1 on most U.S. imports from the country. This new tariff replaces the tariff of 25% that the administration imposed on Canada, effective March 4, under the International Emergency Economic Powers Act (IEEPA).

The announcement follows Canada’s rescission of the Digital Services Tax (DST) - a non-tariff tax – just hours before it was set to take effect. The tax was intended to target revenue earned by U.S. tech giants, such as Google, Amazon, and Apple, from providing digital services to Canadian customers.

Official guidance from CBP has not yet been issued to clarify key questions, such as:

• Will the priority order for applying the new reciprocal tariff follow the same structure as the current framework?
  • Section 232 – Automobile and Auto Parts
  • Section 232 – Aluminum
  • Section 232 – Steel
  • Section 232 – Copper
  • IEEPA Canada

 

• Will USMCA-origin goods remain exempt from the new 35% reciprocal tariff?

The president advised in his notification that the new reciprocal tariff may be adjusted downward if Canada proactively works with the U.S. to “stop the flow of Fentanyl.” 

The Department of Finance Canada advised in a statement that it is actively seeking to secure a trade agreement with the U.S. by July 21.

 

At Allyn International, we are committed to supporting the global trade community with strategic, forward-thinking solutions to help navigate today’s complex tariff landscape. Whether you have questions about tariffs, trade agreements, or would like to explore strategies to reduce their impact on your business operations, our team is here to help. Contact us today for a consultation at sales@allynintl.com, call 239-489-9900, or reach out here. 

Contributor: Rebecca Anderson

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