Tax & Trade Blog

The 30-day moratorium on Trump’s and Canadian retaliatory tariffs should give Canadian importers and exporters some breathing room.  But that breathing room ought to be put to good use considering current duty minimization opportunities, with the future possible implementation of these tariffs in mind.  “Unbundling” is one technique for dealing with punitive tariffs and is reviewed here.

What is Unbundling?

While we are generalizing here, unbundling involves lawfully stripping away non-dutiable components from otherwise dutiable goods.  When goods are imported into a country, the value of those goods needs to be determined so that the proper amount of duty can be applied.  Both Canada and the United States (“US”) are parties to the General Agreement on Tariffs and Trade (the “GATT”) and employ a version of the GATT Valuation Code.  Under that code, the “transaction value” method is the primary system, and focusses on the “price paid or payable” for the imported goods, plus certain additions and less certain deductions.

On January 13, 2025, the Canadian International Trade Tribunal (the “CITT”) announced its Finding in Inquiry NQ-2024-003 (the “Finding”) reporting that the dumping of certain hot-rolled deformed steel concrete reinforcing bar in straight lengths or coils, commonly known as rebar, originating in or exported from the Republic of Bulgaria (Bulgaria), the Kingdom of Thailand (Thailand), and the United Arab Emirates (UAE) (the “Subject Goods”) had caused injury to the domestic industry.

New Anti-Dumping Duties (“ADDs”) now apply to certain Subject Goods imported into Canada and released after January 13, 2025.

As we blogged on here, the threatened Trump and Canadian retaliatory tariffs stand to have a serious impact on Canadian businesses.  Beyond the anticipatory steps we described previously that can be taken now, businesses should begin seriously considering their options for avoiding or recovering any retaliatory tariffs.

In this Report, we will review some of those options.

Tariff Exemptions

In compelling circumstances, it may be possible for a business to obtain an exemption from the retaliatory tariffs.  Exemptions may be available for businesses that can demonstrate they will be unduly harmed by the tariffs.  For example, if it can be established there are no viable alternatives in the supply chain for inputs required for goods that a business produces, an exemption may be made. 

One of the more difficult things I have run into in my 35+ years of practice in customs, trade, and indirect tax, is navigating through extremely difficult to understand appeals processes, buried in multiple similar and parallel sections in the Customs Act (“Act”).

A recent case makes me think that I am not alone in this world (!), with the Canadian International Trade Tribunal (“CITT”) chastising the Canada Border Service Agency (“CBSA”) for misunderstanding and potentially misapplying the customs appeal processes.

The Canada Border Services Agency (“CBSA”) resets its “audit priority areas” twice per year.  Essentially, the CBSA designates certain tariff classification codes as priority areas for customs verifications (i.e., “audits”), based on the program areas which the CBSA believes pose significant risk for important non-compliance in tariff classification, valuation, and origin of goods.

The CBSA has released its January 2025 Trade Compliance Verification priorities, setting the stage for the next six (6) months.    As is often the case, most of the focus is on tariff classification.