On October 1, 2024, the Canadian government released the final list of which goods will be subject to the 25% surtax on steel and aluminium products coming from the People’s Republic of China effective October 22, 2024 (the “Final List”).  

The Final List is rather broad, and includes many items of iron, steel, or aluminum that could be used by manufacturers across various industries, including ingots, flat-rolled coils, bars and rods, extrusion shapes and sections, tubes pipes and hollow profiles, etc.

The Rise of Surtaxes

Recently, Canada’s tool of choice to deal with perceived unfair Chinese Trade Practices has been a surtax under subsection 53(2) of the Customs Tariff.  This previously-unused section allows the Governor in Council to impose a surtax on goods “on the recommendation of the Minister” for the purpose of “responding to acts, policies or practices” that adversely affect Canada.  

The first surtax imposed under 53(2) of the Customs Tariff was a 100% surtax on Chinese-built electric vehicles which came into effect on October 1, 2024 (see our previous blog).

The Canadian government is also currently consulting on a potential surtax on batteries and solar products originating in China and an announcement on those goods is expected shortly.

History of Chinese Steel/Aluminum Surtax

On August 26, 2024, the Canadian government released an initial list of goods subject to the new steel/aluminum surtax with a proposed effective date of October 15, 2024.  

The Department of Finance then held public consultations with Canadians and stakeholders between August 26^th to September 20^th to obtain feedback on the initial list of goods intended to be subject to the surtax. 

The Final List contains numerous Tariff Item numbers and a partial “indicative description” of the goods (the full description can be accessed by cross-referencing the Tariff item with the current Customs Tariff). 

One notable change has been in the effective implementation date, which has been delayed by a week to October 22, 2024. 

Another bit of good news for importers is that the surtax will not apply to goods that are in transit to Canada on October 22^nd (the day the surtax comes into force) pursuant to paragraph 79(a) of the Customs Tariff. 

Finally, in a News Release, the government also indicated that they are willing to consider remission orders from Canadian importers in exceptional circumstances. 

Takeaways

As the Canadian government targets additional Chinese goods with surtaxes, Canadian importers should be mindful of these evolving developments. 

Any Canadian importers of iron/steel/aluminum materials from China should carefully review the Final List of Tariff Item numbers subject to the 25% surtax and compare them to the Tariff Item numbers used on past imports to determine how likely they are to be impacted by the new surtax.  Importers who are not comfortable doing that themselves should seek professional advice.

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