Tax Alert - Relief Is Coming - for Some Canadian Importers

October 25, 2018

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On October 11, 2018, the U.S. Surtax Remission Order (the Remission Order) granted relief in response to an overwhelming number of requests from Canadian importers facing difficulties in sourcing steel and aluminum products from domestic producers. This is good news for importers who have seen their duty costs increase since July 1, 2018 and have felt the impact on their bottom line.

Of importance, the Remission Order provides relief for imported steel and aluminum products deemed of “on-going short supply” or of “temporary short supply” in Canada and lists these items in two separate schedules.

Schedule 1

Schedule 1 of the Remission Order provides a listing of imported products that have been granted an indefinite period of relief. Canadian importers of these goods can apply for refunds of surtaxes paid on imports of these specific products from July 1, 2018 and take some comfort, that for the time being, these products will not attract an additional surtax of either 10% or 25%. Goods listed on Schedule 1 include, but are not limited to, the following:

  • Aluminum cans of 201 ml, 222 ml, 248 ml, 250 ml, 355 ml, 473 ml, 568 ml, 710 ml or 946 ml
  • Electro galvanized steel
  • Angles, shapes and sections of iron or non-alloy steel

Schedule 2

Imported products listed in Schedule 2 were granted a limited relief period, on the assumption that Canadian manufacturers will soon be able to meet the demand for their products. Importers of products on Schedule 2 can apply for refunds of the surtax paid on these specific products from July 1, 2018, but must be aware that the surtax remission will expire on December 31, 2018. Goods listed on Schedule 2 include, but are not limited to, the following:

  • Tubes, pipes and hollow profiles, seamless, of iron (other than cast iron) or steel
  • Flat-rolled products of iron or non-alloy steel, of a width of 600 mm or more, cold-rolled (cold-reduced), not clad, plated or coated; Of a thickness of 0.5 mm or more but not exceeding 1 mm
  • Flat-rolled products of other alloy steel, of a width of 600 mm or more

It is important to note that this Remission Order does not remove all countermeasure surtaxes originally implemented by the Canadian Government on U.S. originating steel and aluminum since July 1, 2018. There are still several products subject to an additional 10% or 25% surtax. Click here for the entire list of goods included in Schedule 1 and Schedule 2 of the Remission Order.

Recovering Surtaxes

Canadian importers can recover surtaxes paid since July 1, 2018 or reduce the impact of ongoing surtaxes on their bottom line by taking the following steps:

  1. Review all steel and aluminum imported into Canada from the U.S. since July 1, 2018 to see if the imported products can benefit from the Remission Order.
  2. Review tariff classifications of all steel and aluminum products to ensure they are not attracting surtaxes incorrectly.
  3. Review the country of origin declared on import documents to ensure they correctly reflect the country of manufacture of the goods. Remember, only steel and aluminum from the U.S. attract the counter-measure surtaxes imposed since July 1, 2018.
  4. Recover surtaxes paid on imports of steel and aluminum imposed since July 1, 2018, which have been identified on Schedule 1 or 2.
  5. Recover surtaxes paid on imports of steel and aluminum imported since July 1, 2018 by exploring other Canada Border Service Agency refund programs.

Undoubtedly, the challenging Canadian customs and trade landscape continues to change at a record pace. BDO Customs & International Trade can provide concise answers to questions about the surtaxes and the impact of the Remission Order.

Brian Morcombe                                                  Charmaine Goddeeris      
Partner, Indirect Tax                                            Senior Manager, Customs & International Trade

Watch this webinar on demand to explore how you can manage the impact of Canadian tariffs on products you bring into Canada.