Tax & Trade Blog

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.

While Canada was given a short reprieve yesterday from the tariffs threatened by US President, Donald J. Trump, President Trump appears to have doubled-down signalling that these 25% tariffs will be coming by February 1.  If this is to be believed, the days of US and Canadian weighted average tariffs in the 2.2-3.4% range are over, and Canadian businesses need to begin preparing for the challenges these sorts of significant tariffs will bring – including the likelihood of Canadian retaliatory measures, which we reported on here. 

In this Report will review basic preparation steps for “right now”.

The trade relationship between the United States (“US”) and Canada is facing renewed tensions as President Trump has reaffirmed that the US will impose a blanket 25 percent tariff on all Canadian goods, and is aiming to do this as soon as February 1, 2025.

In response, Canadian government officials have signaled Canada will respond with retaliatory tariffs and other possible countermeasures such as export taxes.  Consequently, it is important to understand how retaliatory import tariffs and export taxes have worked in the past, and how they might work in the future.

Since 1997, the Customs Act has imposed both mandatory payment and correction obligations on importers subject to Assessments.  In fact, if an importer wishes to challenge the Assessment, the only option is to first pay the assessed amount, and then request a review of the assessment – a system often referred to as “pay-to-play”.

As highlighted in the recent case of Skechers USA Canada, Inc. v. Canada Border Services Agency (2025 FCA 1) (“Skechers”), these obligations leave importers with limited options.  This means putting your best foot forward in a customs Compliance Verification is often the only practical way of dealing with a CBSA Assessment – often with the assistance of specialized legal advice.

Many travelers, including seasoned and sophisticated travelers, misunderstand the fundamental obligation to declare all goods being imported into Canada.

The most common misconception is often that “I’m within my exemption limits” and therefore “I don’t have to tell anybody what I’m bringing in”.

A recent case from the Federal Court of Appeal (“FCA”) demonstrates that this is far from the truth!