DUTY DRAWBACK AN IMPORTANT OPTION IN CURRENT TRADE WAR
Since we last wrote about duty drawback, there have been significant developments in the trade war between Canada and the United States (“US”). Canada has enacted three rounds of retaliatory tariffs, while the US has also imposed a number of different tariffs, with the most recent being President Trump’s reciprocal tariffs.
Amid this escalating trade war with no end in sight, businesses should consider duty drawback as a mechanism to mitigate the impact of tariffs and obtain legal advice to determine eligibility.
TRUMP TARIFFS, CANADA'S COUNTERMEASURES TAKE EFFECT
The trade dispute between the United States (“US”) and Canada has now entered a new phase, as the US imposed 25 percent tariffs on Canadian goods and 10 percent tariffs on Canadian energy products on March 4, 2025. Canada responded in kind and implemented the first phase of its previously announced retaliatory countermeasures through the United States Surtax Order (2025-1). The list of targetted US origin goods remains the same as the prior list, but for the addition of 14 new items under Chapters 98 and 99 of the Customs Tariff Schedule, although these new items appear to be absent from a news release published by the Department of Finance Canada.
While Canadian businesses may have a 30-day reprieve from the threatened Trump and Canadian retaliatory tariffs, businesses should take the opportunity now to put plans in place to minimize the fallout should tariffs be enacted. One avenue businesses can pursue to mitigate the impact of the tariffs is duty drawback.
While President Trump’s Executive Order removes the option for American businesses to claim duty drawback, Canada Border Services Agency (“CBSA”) has confirmed that duty drawback remains available for Canadian businesses engaged in the import and subsequent export of goods, even if retaliatory tariffs come into force.
