At a glance
- Effective July 24, 2026, the U.S. has imposed new Section 301 duties on many Canadian-origin goods.
- Not all Canadian exports will be subject to Section 301 duties—CUSMA-qualifying goods and product-specific exclusions may apply.
- Correct tariff classification and origin documentation are critical to claiming available relief.
- Businesses should review shipments, contracts, and customs processes as the measures take effect.
- Practical strategies like confirming the U.S. HTSUS classification can help reduce duty exposure while maintaining customs compliance.
The Office of the United States Trade Representative (USTR) has announced final trade measures arising from its Section 301 investigation into the effectiveness of forced labour import prohibitions maintained by more than 60 U.S. trading partners.
Canada is among the jurisdictions subject to the final action.
Effective July 24, 2026, many Canadian-origin goods will be subject to an additional 10% ad valorem duty when imported into the U.S.
Canadian-origin goods that enter duty-free under the Canada-United States-Mexico Agreement (CUSMA) remain exempt from the additional Section 301 duties.
The new tariffs also include numerous product and sector-specific exclusions.
How to determine whether the new Section 301 tariffs apply
Exposure should be assessed on a product-by-product basis, rather than by applying a single conclusion across all Canadian-origin goods.
The new Section 301 measure establishes a country-specific tariff measure that is administered through the Harmonized Tariff Schedule of the United States (HTSUS). As a result, determining whether goods are subject to the additional 10% duty requires considering several factors, including tariff classification, country of origin, CUSMA eligibility, and whether any exclusions apply.
Canadian businesses should also be aware of other recently announced U.S. tariff measures. New 50% U.S. Section 338 tariffs take effect Aug. 19, 2026. Read our tax alert to learn which Canadian products are affected, CUSMA implications, and how you can prepare.
Does CUSMA provide an exemption from the additional 10% Section 301 tariff?
One of the most important points for Canadian exporters is that preferential tariff treatment under CUSMA remains available. Although Canada is among the jurisdictions subject to the Section 301 measures, USTR has expressly exempted qualifying Canadian-origin goods that are entered duty-free under CUSMA from the additional 10% duty.
This exemption is expected to significantly reduce the impact for many Canadian exporters, but it doesn’t apply automatically. Importers must satisfy the applicable CUSMA rules of origin and properly claim preferential tariff treatment at the time of importation.
The tariff measure reinforces the commercial importance of maintaining CUSMA origin qualification and ensuring preferential tariff treatment is properly claimed where available.
Are there other exemptions to the new Section 301 measures?
In addition to the CUSMA exemption, the final action includes a broad range of product and sector-specific exclusions that may significantly reduce duty exposure for certain imports. These exclusions extend across a wide range of industries and product categories.
The more notable exclusions are:
- specified articles already subject to certain U.S. Section 232 measures, including aluminum, steel, and copper articles;
- specified civil aircraft, aircraft engines, parts, and components;
- products for pharmaceutical applications;
- semiconductor articles;
- passenger vehicles and passenger vehicle parts already subject to separate U.S. tariff measures;
- medium- and heavy-duty vehicles and vehicle parts;
- wood products; and
- numerous individual tariff classifications identified under specific Chapter 99 provisions.
Determining whether an exclusion applies requires a detailed review of the applicable tariff classification, Chapter 99 reporting requirements, and the conditions attached to each exclusion.
What Section 301 tariffs mean for your business
The new tariffs may affect landed costs, customs reporting, and supply chain planning for Canadian businesses exporting to the United States.
When assessing the potential impact of the new measures, businesses should consider the following:
- CUSMA qualification has become more valuable. Qualifying Canadian-origin goods entered duty-free under CUSMA remain exempt from the additional 10% Section 301 duty.
- Tariff classification matters. The application of the additional duties, as well as many of the available exclusions, depends on the correct classification of imported goods.
- Product exclusions may significantly reduce duty exposure. The final action contains numerous product and sector-specific exclusions that should be reviewed before concluding that additional duties apply.
- Customs compliance remains critical. Importers should ensure origin documentation, tariff classifications, and customs declarations accurately support any preferential tariff claims or applicable exclusions.
- The cost of non-compliance has increased. Businesses that do not qualify for CUSMA preferential treatment, or cannot substantiate origin claims or applicable exclusions, may experience an immediate increase in landed costs.
How can Canadian businesses prepare for the new 10% tariffs?
The effective date of the new tariffs depends on when goods are entered for consumption or withdrawn from warehouse for consumption—not when they are ordered, invoiced, or shipped. Businesses should therefore review upcoming shipments, including goods already in transit, and inventory held in U.S. bonded facilities to determine whether the new measures may apply.
To reduce duty exposure and maintain customs compliance, Canadian exporters and U.S. importers should:
- Determine product-level exposure: Confirm the U.S. HTSUS classification, country of origin, and CUSMA eligibility for each imported product.
- Review available exclusions: Assess whether any Chapter 99 exclusions or other special tariff treatment apply.
- Validate supporting documentation: Ensure origin documentation and customs records support any preferential tariff claims or applicable exclusions.
- Coordinate with the U.S. importer and customs broker: Confirm the applicable Chapter 99 reporting requirements, customs documentation, and treatment of upcoming entries.
- Quantify the financial impact: Assess potential duty liability, related cash-flow implications, and contractual responsibility for additional duties.
- Review commercial arrangements: Confirm the importer of record, applicable Incoterms, pricing provisions, and responsibility for duties under existing customer and supplier agreements.
- Evaluate customs and supply chain planning opportunities: Consider tariff classification, customs valuation, origin, sourcing, manufacturing, and supply chain alternatives that may reduce duty exposure.
- Monitor implementation developments: U.S. Customs and Border Protection (CBP) may issue additional implementation guidance, reporting instructions, or technical corrections following publication of the final action.
How BDO can help
The new Section 301 measures introduce new compliance and duty planning considerations for Canadian businesses exporting to the United States.
Our Customs & International Trade team can help you:
- assess exposure to the new Section 301 measures;
- review CUSMA qualification and supporting origin documentation;
- validate tariff classifications and identify applicable Chapter 99 exclusions;
- evaluate duty mitigation and supply chain planning opportunities;
- review customs compliance processes and import documentation requirements; and
- advise on strategies to manage duty exposure while maintaining compliance with evolving U.S. customs requirements.
Please reach out to your BDO advisor or a member of our Customs & International Trade team to discuss how these measures may affect your business.
The information in this publication is current as of July 23, 2026.
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.