On May 17, 2019, Global Affairs Canada released a joint statement with the United States, announcing the elimination (which became effective May 20, 2019) of all tariffs imposed by the United States under section 232 of the Trade Expansion act of 1962 (19 USC §1862) – duties on steel and aluminum, and all retaliatory tariffs imposed by Canada

Both countries have also agreed to terminate all pending litigation between them in the World Trade Organization, with respect to the section 232 duties on steel and aluminum and Canada’s retaliatory surtax.

When the United States began imposing section 232 duties on steel and aluminum imported from Canada in June 2018, Canada responded with a retaliatory surtax, effective July 1, 2018. Since then, both countries have been in negotiations to end the tariffs, which were having negative impacts on both countries’ economies. On May 17, 2019, the two countries reached a settlement to end the tariffs and agreed to:

• Implement measures to prevent the importation of aluminum and steel that is unfairly subsidized and/or sold at dumped prices
• Prevent transshipment of aluminum and steel made outside of either Canada or the United States into the other country
• Establish a mutually agreed-upon process for monitoring the trade of aluminum and steel product between the two countries (this may involve distinguishing between product made with steel melted/poured in North America from those made from steel melted/poured outside of North America)

If imports of aluminum or steel product increase material beyond historic trade volumes within a period, the importing country may request consultations with the exporting country, and then has the ability to impose a 25% duty on steel and 10% duty on aluminum products. However, should the importing party choose to impose duties on steel or aluminum products, the exporting country can retaliate only in the same affected sector.

The surtax is driven by both tariff classification and origin. Therefore, if you are an importer whose company has paid surtax on imported goods, you may be eligible for a refund. Recommendation –  review your imports and supply chain to identify potential cost savings and compliance gaps

For further information, please contact:

Jaime Seidner, Customs & International Trade
+1 416 867 8492
jaime.seidner@pwc.com

Jody McLean, Customs & International Trade
+1 416 869 2459
jody.mclean@pwc.com

Cynthia Lei, Customs & International Trade
+1 416 941 8383 ext 13867
lei.cynthia@pwc.com

Image source: unsplash.com