Quick Answer
Effective 12:01 a.m. on September 8, 2026, Canada imposed counter-tariffs of 15%, 25% and 50% on approximately CA$27.6 billion of U.S.-origin imports. The measures were enacted through the United States Surtax Order (2026) as a dollar-for-dollar response to U.S. Section 338 and Section 232 tariffs. Approximately 600 new tariff lines were added, bringing the total covered lines to more than 800. Sectors hit hardest include steel and aluminum, dairy, appliances, agricultural equipment, pulp and paper, electronics, furniture, apparel and athletic equipment. Goods that were in transit to Canada before September 8, 2026 are exempt, and the existing tariff remission framework remains available.
Why this matters right now for Ontario businesses
If you run a business in Ontario and any part of your supply chain touches the United States, your landed costs changed overnight. On September 8, 2026, a new federal surtax quietly added 15%, 25% or 50% to the price of hundreds of U.S.-origin products crossing the border. That is not a headline for lawyers only. It is a real, immediate hit to margins for grocers stocking American cheese, contractors buying appliances, print shops sourcing paper and Hamilton fabricators working with U.S. steel.
You may have already seen this covered as a dense legal or trade-policy story. This guide translates it into what actually matters for you: which products are affected, how the accounting works, and the practical steps to take this week. For deeper background, see our earlier guide to U.S. tariffs on Canadian small businesses.
Quick start: pick your path
The right next step depends on which side of the counter you are on. Skim the three paths below and read the one that fits.
The surtax applies at the border, so it flows into retail prices over the coming weeks rather than as a line item on your receipt. Expect gradual price increases on appliances, U.S. cheese, some clothing and consumer electronics. Time larger U.S.-origin purchases carefully and check whether a Canadian or non-U.S. alternative fits.
Pull an inventory of your U.S.-origin purchases from the last twelve months and identify which now sit in the 15%, 25% or 50% band. Model the impact on your quoted prices before you accept the next contract.
Your action is broader: margin analysis, supplier renegotiation, remission eligibility review, and a conversation with your accountant about inventory capitalization. Move on it now.
What actually changed on September 8, 2026
The trigger was the U.S. decision to impose a 50% tariff on CA$27.6 billion of Canadian goods, effective August 22, 2026, under Section 338 of the U.S. Tariff Act of 1930. Three days after those U.S. measures took full effect, the Government of Canada announced on August 25, 2026 that it would respond dollar for dollar, rate for rate. That announcement became binding law two weeks later.
The scope is deliberately targeted rather than blanket. Approximately 600 new tariff lines were added, and combined with earlier counter-tariffs the total rises to more than 800 lines. Goods that were physically in transit to Canada before 12:01 a.m. on September 8 are outside the surtax. For historical context, see our earlier note on the consultation on potential surtaxes for importers.
The three tariff bands: 15%, 25% and 50%
The 50% band covers goods where the underlying U.S. Section 338 rate is 50%. In practice, this captures primary steel and aluminum, certain furniture, and certain apparel and clothing lines. If your business bought U.S.-origin steel at a 25% counter-tariff before, that rate has now doubled.
The 25% band applies to goods matching a U.S. rate of 25%. This includes certain appliances such as washers, dryers and ranges, dairy products including cheese, certain fish and seafood, and certain steel and aluminum derivative products (finished parts rather than raw stock). The 15% band covers goods matching a U.S. rate of 15%, including pulp and paper, some electronics, and portions of the apparel schedule.
| Band | Rate | Example U.S.-origin products | Typical Ontario impact |
|---|---|---|---|
| Lower | 15% | Pulp and paper, some electronics, some apparel | Print shops, IT resellers, retailers |
| Middle | 25% | Appliances, cheese, agricultural equipment, steel derivatives | Grocers, contractors, Ontario farms |
| Higher | 50% | Primary steel and aluminum, certain furniture and apparel | Hamilton fabricators, furniture retailers |
To confirm the exact rate for a specific tariff item, use the Canada Tariff Finder and read alongside the Schedule to Canada's Customs Tariff. The Department of Finance publishes and periodically updates the full product list.
Sector-by-sector: who feels it in Ontario
Different Ontario sectors feel this differently. Steel and aluminum takes the sharpest hit. Hamilton fabricators, GTA structural steel contractors, and any manufacturer buying U.S. rebar or primary aluminum now face a 50% surtax on that input. Dairy, particularly U.S. cheese and specialty dairy, sits at 25%, which grocers, restaurants and quick-serve chains will feel first.
Appliances at 25% affects retailers, general contractors and homeowners in the middle of renovations. Agricultural equipment at 25% lands on Southwestern Ontario farms buying U.S. tractors and implements ahead of the next planting season. Pulp and paper at 15% squeezes print shops, packaging companies and marketing agencies quoting on 2026 print runs.
Electronics at 15% hits IT resellers and consumer electronics retailers. Furniture at 50% and apparel at 15% to 50%, depending on category, catch retailers with U.S. wholesale relationships. If you sit in any of these sectors, do not assume the number in your inventory system is still your real cost.
Step-by-step: what to do this week if you import from the U.S.
- 1Pull twelve months of U.S.-origin purchasesFrom your accounting or ERP system, sorted by supplier and product code. Aim for line-item detail, not summary totals.
- 2Match each SKU against the surtax scheduleUse the Canada Tariff Finder to determine the applicable band. Country of origin is the key marker, not brand; a U.S.-branded product manufactured in Mexico or Vietnam is generally outside the surtax.
- 3Model the new landed cost per SKUInclude duty, the surtax, brokerage and freight. Small differences at the line level can reshape quoted prices for the next contract.
- 4Decide product by product: pass-through, absorb, or re-sourceNot every SKU can bear a full pass-through. Test price elasticity on your top ten items before committing to a blanket increase.
- 5Assess remission eligibility for exposed SKUsThe federal remission framework can waive or refund the surtax in specific circumstances. The CBSA audit list guidance helps you assess documentation risk.
- 6Speak with your accountant about cash-flow timingThe higher landed cost lifts your recoverable GST/HST, but the recovery arrives on a later return than the payment. Adjust your cash-flow forecast accordingly.
Accounting treatment: HST/GST, CRA deductibility and inventory
On the GST/HST side, tax at the border is calculated on the duty-paid value of the goods, which now includes the new surtax. For an Ontario importer paying 13% HST, a CA$10,000 U.S. purchase that attracts a 25% surtax now generates HST on CA$12,500 rather than on CA$10,000. If your business is a GST/HST registrant using the goods in commercial activity, the additional HST is generally recoverable as an input tax credit. The recovery typically arrives on a later return than the payment.
On the income tax side, customs duties and surtaxes on business inputs are generally deductible in the ordinary course. They may flow through cost of goods sold or, for inventory-heavy businesses, be capitalized into inventory value. That distinction matters for interim financial statements and any lending covenant tied to gross margin. For context on wider cross-border tax obligations, see our guide on cross-border tax compliance for Canada-US business.
Common mistakes to avoid
Even careful importers stumble on the same seven mistakes.
- →Assuming the surtax applies to any U.S.-branded product. It applies only to goods that qualify as U.S.-origin under the CUSMA marking rules.
- →Missing the goods-in-transit exemption. Shipments physically in transit before 12:01 a.m. on September 8, 2026 are outside the surtax.
- →Forgetting that the higher landed cost lifts your recoverable GST/HST as well, and not adjusting cash-flow forecasts for the timing gap.
- →Failing to document remission eligibility even when a product may qualify. Poor records can foreclose relief later.
- →Treating the surtax as non-deductible. Customs duties and surtaxes on business inputs are generally deductible.
- →Repricing every SKU by the full tariff percentage without checking whether the market will bear it.
- →Ignoring inventory valuation impact, which distorts gross margin and covenant compliance. For deeper cash-flow strategy, see proactive cash flow management for SMEs.
Frequently asked questions
What US products are subject to the new Canadian counter-tariffs?
Do the counter-tariffs apply to goods that were already on the way when September 8 hit?
Can I claim the tariff cost as a business expense on my Canadian tax return?
Can I recover the GST or HST that gets calculated on top of the tariff?
What is tariff remission, and can my small business apply for it?
Does the tariff apply to a US-branded product that was actually made in Mexico or Vietnam?
Will consumer prices go up on appliances, groceries and clothing in Ontario because of this?
Not sure how the counter-tariffs affect your business?
ClearWealth helps Ontario businesses model landed-cost impact, review remission eligibility, plan HST/GST cash-flow timing, and set up inventory treatment that keeps interim financials clean. To see our broader work with SMEs, visit our accounting and tax advisory services.
Book a ConsultationSources & References
- Canada announces targeted countermeasures — Department of Finance Canada, Aug 25, 2026. https://www.canada.ca/en/department-finance/news/2026/08/canada-announces-targeted-countermeasures-and-substantive-support-for-workers-and-businesses-in-response-to-us-tariffs.html
- List of products subject to counter-tariffs effective September 8, 2026 — Department of Finance Canada. https://www.canada.ca/en/department-finance/news/2026/08/list-of-products-from-the-united-states-subject-to-counter-tariffs-effective-september-8-2026.html
- Canada Border Services Agency — Customs Notices. https://www.cbsa-asfc.gc.ca/publications/cn-ad/menu-eng.html
- Canada Tariff Finder — Trade Commissioner Service. https://www.tariffinder.ca/en/
- CUSMA Country of Origin Marking Regulations. https://laws-lois.justice.gc.ca/eng/regulations/SOR-2020-155/
- Excise Tax Act — GST/HST on imported commercial goods. https://laws-lois.justice.gc.ca/eng/acts/e-15/
- Income Tax Act — deductibility of business expenses. https://laws-lois.justice.gc.ca/eng/acts/i-3.3/
