The trade relationship between the United States (“US”) and Canada received a brief period of reprieve with the recent 30-day postponement of President Trump’s blanket tariffs and Canada’s retaliatory countermeasures. Despite this intermission, the US and Canada appear set to face off again with tariffs and other countermeasures, much like their counterparts on the ice in the nations face off.
President Trump has shown a willingness to continue his strategy of cajoling Canada into trade concessions, as evidenced by his February 10, 2025, executive order imposing a 25% tariff on all steel and aluminum imports entering the US. While there may be legitimate questions about the legality of such tariffs, in this dispute where the refs are off the ice the size of the US economy is a major advantage.
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.
