Tariffs and trade measures can shift quickly. To determine if your product is affected:
- – Review your product’s HS code using the Canadian Border Services Agency (CBSA) or Global Affairs Canada tools
- – Contact a customs broker or freight forwarder
- – Reach out to your Export Advisor for help interpreting current trade conditions in your target market
“Product of Canada”
- – Definition: At least 98% of the total direct costs of producing or manufacturing the product must be Canadian (e.g., ingredients, processing, labour).
- – Example: Maple syrup made entirely from Canadian sap and processed in Canada.
- – Stricter Label: This is the highest standard of Canadian origin labeling.
“Made in Canada”
A “Product of Canada” claim also requires the last substantial transformation to occur in Canada, in addition to the 98% direct-cost threshold. Food products are governed by separate Canadian Food Inspection Agency (CFIA) guidance, so the page should distinguish food from non-food claims.
- – Definition: At least 51% of total direct production or manufacturing costs were incurred in Canada.
- – Requirement: The last substantial transformation occurred in Canada. The claim includes an appropriate qualifying statement, such as “Made in Canada with imported parts.”
- – Example: Chocolate bars manufactured in Canada using imported cocoa but Canadian sugar.
“Assembled in Canada”
- – Definition: The product is put together in Canada, but most components or ingredients are from other countries.
- – Example: A bicycle assembled in Canada using mostly imported parts.
Further Reading: Competition Bureau: Made in Canada claims
For a detailed explanation, read our blog post “Made in Canada” or “Product of Canada”? Why Labels Matter’
When your product uses inputs from multiple countries, you don’t just “add up the flags.” Instead, country of origin is determined by applying the Rules of Origin (ROO) under the relevant tariff framework.
There are two different types of Rules of Origin – Preferential and Non-Preferential.
Preferential ROO apply under trade agreements (e.g., CUSMA, CPTPP).
Each agreement has a specific Product-Specific Rule (PSR) for each HS code.
Rules may involve:
- – Tariff shift (change in classification)
- – Regional Value Content (e.g. 50% must be from Canada/Mexico/U.S.)
- – Specific processing operations
Non-preferential ROO apply outside of trade agreements, mostly for most-favoured-nation (MFN) treatment or anti-dumping cases.
Digital Products
- – Tariffs: Digital goods (such as software, ebooks, music, and digital art) are typically not subject to tariffs, as they are intangible products that don’t physically cross borders.
- – Exceptions: Some physical goods that contain digital content (like electronics or devices with embedded software) may still face tariffs on the hardware itself.
Services
- – Tariffs: Services (including professional services like consulting, legal, IT support, and SaaS) are not subject to tariffs in most cases, as they are intangible.
- – Indirect Costs: Services may be impacted by local taxes (e.g., state sales taxes or VAT) and regulatory barriers, but tariffs are not typically an issue.
Note: For both digital products and services, geopolitical restrictions and trade sanctions can still affect access or impose additional barriers, particularly with certain countries.
A remission order is a special authorization from the Government of Canada to waive or refund customs duties or taxes on imported goods in certain situations — often when duties cause undue hardship or are contrary to public policy.
Remission may apply:
- – Retroactively (refund of duties already paid)
- – To specific industries, regions, or tariff codes
- – During emergencies or trade disputes
Example: Canada issued remission orders during the COVID-19 pandemic to waive duties on PPE and medical equipment.
There are three key components:
- Duty Deferral: Import without paying duties upfront
- Duty Drawback: Refund of duties paid on imported goods that are later exported
- Customs Bonded Warehouse: Store goods without paying duties until released for Canadian consumption (or export without duties)
- Can these programs help with U.S.-related tariffs or retaliatory duties?
Yes — if you’re importing goods that face retaliatory tariffs (e.g., aluminum, steel), remission orders may apply. If you’re importing goods for re-export to the U.S., the duty deferral program can help you avoid unnecessary duty costs.
Click here to view a Government of Canada Article: Process for requesting remission of tariffs that apply on certain goods from the U.S.
Choosing Incoterms® strategically lets you:
- – Reduce liability (e.g. Use FCA (Free Carrier) to transfer risk when the goods are delivered to the buyer’s carrier at the named place.)
- – Control cost fluctuations (e.g. avoid DDP (Delivered Duty Paid) if duties or logistics costs are unstable)
- – Respond to trade tensions (e.g. if tariffs hit your goods, using EXW (ExWorks) or FCA shifts customs risk to the buyer)
In trade war scenarios, buyers and sellers often renegotiate Incoterms® to share or isolate exposure to duties and delays.
Start by asking:
- – How much of my cost of goods sold (COGS) is impacted by the tariff?
- – Can I pass the cost on to the buyer, or will I lose competitiveness?
- – Are there alternative classifications or countries of origin that reduce duty exposure?
- – Would I need to redesign my pricing strategy or exit that market?
Export Navigator can help you model the impact and explore options like reclassification, sourcing shifts or market diversification.
