At a glance
- The U.S. introduced a 150-day temporary tariff under Section 122, effective February 24, 2026.
- CUSMA-qualifying goods are excluded, making origin compliance critical for Canadian exporters.
- The measure is not a traditional trade remedy but a balance-of-payments tool, reinforcing policy volatility.
- Other U.S. tariffs (Sections 232 and 301) remain in force and may still apply.
- Exporters should assess documentation, supply chains, and broader tariff exposure to mitigate risk.
What Section 122 Actually Does
The measure applies a temporary flat tariff to covered imports entering the U.S during the 150-day period.
There are important exclusions, particularly for Canada. Most notably:
- Goods that qualify under the Canada-U.S-Mexico Agreement/U.S.-Mexico-Canada Agreement (CUSMA/USMCA) are excluded.
- Certain categories are also excluded including critical minerals, select agricultural products, pharmaceuticals, vehicles, and informational materials.
The practical takeaway is straightforward: CUSMA-qualifying goods can continue to enter the U.S. tariff-free, but only where origin can be clearly demonstrated.
Broader implications beyond Canada
While this alert is focused on Canadian exporters, it is important to note that this temporary tariff has broader global implications. The measure applies widely to non-exempt imports into the U.S., meaning exporters from countries outside North America may face direct tariff exposure during the 150-day period.
Companies that ship goods through Canada for onward export to the U.S. should be particularly cautious. Transshipment through Canada does not confer CUSMA origin, and goods that do not genuinely qualify as originating under the agreement may be subject to the temporary tariff, as well as increased scrutiny by U.S. Customs and Border Protection.
Businesses involved in cross-border distribution, fulfillment, or value-added processing should ensure that origin determinations are defensible and that Canada is not being relied on as a routing solution rather than a legitimate origin.
A reality check on other U.S. tariffs
While CUSMA provides important protection against this temporary tariff, it does not override other U.S. tariff regimes.
Measures imposed under Section 232 (national security) and Section 301 (retaliatory tariffs) remain fully in effect and continue to apply where relevant.
In other words, CUSMA origin alone does not eliminate all tariff exposure. Canadian exporters should continue to assess cumulative tariff risk, particularly for products involving steel, aluminum, automotive content, or China-related inputs.
Why This Matters for Canadian Exporters
For many Canadian exporters, this measure will not immediately result in new tariff exposure, provided CUSMA compliance is solid. That said, it still matters.
- First, it reinforces how quickly the trade environment can change. This measure was announced with little lead time, followed by evolving public commentary. Companies relying on stability or precedent are finding those assumptions increasingly fragile.
- Second, it underscores that CUSMA compliance is the dividing line between exemption and cost. Where origin qualification has been assumed, loosely documented, or inconsistently applied, even temporary measures can create immediate exposure.
- Finally, it highlights the importance of planning beyond a single market. While this tariff is time-limited, it reflects a broader pattern of policy volatility. Exporters heavily reliant on the U.S. market should be thinking about contingency planning, pricing flexibility, sourcing strategies, and, where feasible, export diversification.
Bottom Line
For most Canadian exporters with solid CUSMA compliance, this measure will not create immediate new costs. The bigger issue is how quickly trade policy can change and how little warning companies may have when it does.
Exporters that know where their exposure sits and can support that position with documentation, are better positioned than those relying on assumptions. In this environment, preparedness matters as much as the tariff itself.
When trade policy can change quickly, clarity and preparation make the difference
BDO’s Customs and International Trade Services team works with Canadian exporters to navigate tariff risk in fast-moving and uncertain trade environments.
We support clients by:
- Assessing CUSMA origin eligibility and documentation readiness
- Identifying tariff exposure across multiple U.S. regimes, including Sections 232 and 301
- Reviewing contracts to clarify tariff responsibility and pricing risk
- Stress-testing supply chains against policy volatility and short-notice changes
- Supporting mitigation and contingency strategies, including alternative sourcing and market diversification
The information in this publication is current as of Feb. 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.