Increase in Customs Tariffs 2025: Practical Guide to Protect Your Canadian Business

This increase will affect the majority of products exported to the United States, with the exception of the energy sector, which will be taxed at 10%. Companies must quickly adapt by assessing their exposure to the American market and exploring new business strategies to maintain their competitiveness.

The new US tariffs in brief

The implementation of the new customs tariffs will apply to all Canadian goods arriving at U.S. ports of entry starting at 12:01 AM on February 4, 2025. Businesses will need to declare the Canadian origin of their products using form CBP 7501.

A precise tariff code system determines which products are affected. For example, automotive parts (HS code 8708) will be taxed at 25%, while crude oil (HS code 2709) will only be taxed at 10%.

In response to these changes, the Canadian government announced a corresponding retaliation on $155 billion worth of American products. The first $30 billion will be taxed starting February 4, followed by $125 billion after a 21-day adjustment period.

Impact on Canadian steel and aluminum

The exports of steel and aluminum to the United States will face a double tariff impact. The cumulative taxes will reach 50% for these strategic metals, an unprecedented situation in North American trade history.

The first estimates reveal an anticipated decrease of 37% in Canadian steel sales starting in March 2025. The aluminum sector, particularly prominent in Quebec with its nine aluminum smelters, expects a 40% reduction in its exports.

Major producers like Rio Tinto and Alcoa are already exploring alternative markets in Europe and Asia. This strategic shift aims to maintain production levels despite the loss of part of the American market.

Customs tariffs calculation for 2025

To determine the exact amount of applicable customs tariffs, the value of the goods must be converted into Canadian dollars according to the exchange rate of the day from the Bank of Canada. Transportation and insurance costs are added to this calculation base.

The tariff classifications of goods then determine the applicable rate. An automated verification system allows companies to validate their calculations before shipping. The CBSA's digital platform provides simulation tools to anticipate these costs.

HS Codes: navigation and classification

The structure of HS codes follows a precise pyramid logic: the first two digits designate the general category of the product, positions 3-4 detail the subcategory, while positions 5-6 provide additional specifications.

A practical tool like the Canada Info-Tariff Calculator simplifies the search for the appropriate codes. This platform allows for quick identification of the correct classification, even without knowing the exact code, by simply using the product description.

Canadian exporters also have access to technical assistance through the CBSA's direct line. Specialized agents assist businesses in verifying their classifications, which is particularly useful for complex or innovative products.

Strategies in Response to Price Increases

Market diversification is a priority strategy for Canadian companies. Exploring business opportunities in Europe and Asia helps reduce dependence on the American market.

Supply chain optimization is becoming crucial. Companies benefit from identifying alternative local or international suppliers to maintain their competitiveness. A concrete example: a company in British Columbia reduced its costs by 15% by relocating its production.

The government programs provide substantial support. The new $20 million adaptation fund helps businesses modernize their equipment and train their staff. Innovation grants, in particular, allow for the automation of certain production processes to offset rising costs.

Trade agreements: which alternatives?

The Comprehensive Economic and Trade Agreement (CETA) provides Canadian businesses with preferential access to a market of 450 million consumers. Zero tariffs on 98% of products make this alternative particularly attractive compared to American tariffs.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership represents another promising option. Japan, Australia, and eight other member countries offer favorable conditions for Canadian exporters. For example, a Montreal-based medical technology company has managed to triple its sales in the Asia-Pacific region thanks to this agreement.

Negotiations are also underway with India to create a new trade corridor. This emerging market of 1.4 billion people could quickly become a major destination for Canadian products.

Support for affected Canadian businesses

The Canadian government is launching an exceptional aid program of $500 million to support businesses facing American tariffs. This fund finances interest-free loans for 24 months and direct grants of up to 100,000 dollars per company.

A single window now centralizes all assistance requests. SMEs benefit from priority access to emergency funds with expedited processing within 48 hours.

The Canada Development Bank also offers flexible financing solutions. Businesses can obtain up to 2 million dollars to modernize their equipment or develop new markets. A 12-month deferred repayment automatically applies to these loans.

Economic Perspectives Canada - United States

The implementation of the new customs tariffs is likely to severely affect the Canadian economy. Analysts predict a GDP decline of 2.5% over the year if these measures persist, with a particularly pronounced impact in manufacturing regions.

The American president Donald Trump maintains his firm stance despite calls for moderation. This situation is pushing Canadian companies to accelerate their diversification towards Europe and Asia.

The Bank of Canada anticipates a depreciation of the Canadian dollar to as low as $0.68 US by the end of 2025. This decline could partially offset the effect of tariffs by making exports more competitive in other markets.

The automotive sector proves to be particularly vulnerable: new American buyers may turn to local suppliers, threatening 120,000 jobs in Canada.