Quick Answer
- Effective 12:01 a.m. ET on September 8, 2026, Canada imposed counter-tariffs on more than 700 U.S. products, covering roughly C$27.6 billion in annual imports.
- The tariffs are tiered at 15%, 25%, and 50%, matching the U.S. rate applied to each equivalent Canadian good under Section 232 and Section 338.
- The 50% band covers steel, aluminum, furniture, and clothing. The 25% band covers cheese, dairy, appliances, and some seafood. The 15% band covers electronics and tools.
- Canadian importers pay the duty at the border on U.S.-origin goods. Goods in transit to Canada on September 8, 2026 are exempt. HST paid at the border remains recoverable through the input tax credit; the tariff itself is not.
- A federal C$7.5 billion support envelope is open to affected Canadian businesses through Regional Development Agencies, the BDC Pivot to Grow program, and the new Canada Strong Diversification Fund.
What Just Changed at the Border
If you import anything from the United States, the rules changed at 12:01 a.m. Eastern Time on September 8, 2026. That morning, Canada activated counter-tariffs on more than 700 American products, matching United States tariffs dollar for dollar under the federal Department of Finance's response to Section 232 and Section 338 duties.
For an Ontario retailer stocking American appliances, a Hamilton fabricator buying American steel, or a Mississauga distributor moving American electronics, the extra duty is now built into the landed cost of every U.S.-origin shipment that arrived after that cutoff. Goods already in transit on September 8 are exempt, but everything ordered after is not.
This is not a temporary surcharge waiting for a trade deal. It is a live federal policy with a defined product list, three specific rate bands, and a C$7.5 billion support envelope built alongside it.
For more on cross-border tax basics, read our earlier guide on Cross-Border Taxation Compliance for Canada-U.S. Business.
Quick Start: Pick Your Path
Pick the path that matches your situation.
For more context, see our small business guide to U.S. tariffs on Canada.
The Three Tariff Bands and What They Cover
The 50% band is the heaviest. It covers American steel and aluminum (doubled from the earlier 25% rate), furniture, and clothing and apparel. Ontario manufacturers and construction contractors sourcing U.S. structural steel are most exposed here.
The 25% band covers cheese and dairy, appliances, fish and seafood, and certain steel and aluminum derivatives. Retailers, restaurant operators, and appliance dealers typically feel this band first.
The 15% band covers electronics and tools. Small importers and independent retailers moving American consumer electronics fall into this band.
Every product's specific rate is determined by its HS code, which can run up to 10 digits. The Department of Finance publishes the official product list, and it has been revised more than once, so always check the current federal list rather than a news summary. Your customs broker or the Canada Border Services Agency (CBSA), the federal border agency, can confirm the rate for any specific stock-keeping unit (SKU).
For historical context on similar measures, see Decoding the Full List of Section 301 Tariffs.
How the Tariff Hits by Business Type
An individual consumer does not deal with the CBSA directly. The retailer pays the duty and typically absorbs some of it while passing the rest through in shelf prices, so the visible impact is often a 5 to 20 percent price increase on affected categories over the following weeks.
A sole proprietor who imports inventory pays the duty at the border and generally capitalizes it into inventory cost. When the goods sell, the tariff flows through cost of goods sold on Schedule T2125 of the personal T1 return, reducing net business income.
An incorporated SME operating as a Canadian-controlled private corporation (CCPC) treats the duty the same way, but on Schedule 125 of the T2 corporate tax return. The duty becomes part of cost of goods sold and reduces taxable income at the corporate rate.
A larger corporation faces the same accounting mechanics with additional working capital strain, because the extra duty ties up cash between purchase and sale. The Canada Strong Diversification Fund is aimed most directly at this tier.
For structural background, see Incorporation vs. Sole Proprietorship: Smart Business Structures for Growth.
Step-by-Step Roadmap: What to Do This Month
If your business imports from the United States, the next 30 days matter. Here is a practical sequence to work through with your bookkeeper or accountant.
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1
Pull import records Pull your import records for the last 12 months and flag every U.S.-origin SKU. This tells you your total exposure and which products drive the most cost.
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2
Look up HS codes Look up each flagged SKU against the federal Department of Finance list to confirm which rate band applies. Do not guess based on category; the rate depends on the exact HS code.
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3
Review CUSMA rules of origin Review your CUSMA (the Canada-United States-Mexico Agreement, formerly NAFTA) rules-of-origin certificates with your customs broker. Some U.S.-marked goods may still enter Canada duty-free if they meet the originating-goods test.
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4
Reprice affected inventory Reprice affected inventory. Model at least two scenarios, full pass-through and partial pass-through, before you notify commercial customers. Overnight full pass-through often loses more revenue than staged increases.
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5
Assemble remission evidence If you have inventory categories with no reasonable Canadian or non-U.S. substitute, start assembling evidence for a tariff remission application. Remission is discretionary and generally requires proof that no comparable alternative exists.
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6
Apply for federal relief Apply to at least one of the three federal relief programs: the BDC Pivot to Grow program, a Regional Development Agency non-repayable grant, or the Canada Strong Diversification Fund. Many businesses may qualify for more than one.
For the CBSA process side, see CBSA CARM and RPP Security Deadline.
Accounting Treatment: HST, T2, and Cost of Goods Sold
For accounting purposes, the duty is generally capitalized into inventory at the moment of import. It becomes part of the landed cost of the goods, alongside freight, insurance, and customs brokerage fees.
When the inventory sells, the tariff flows through cost of goods sold. For an incorporated business, that appears on Schedule 125 of the T2 corporate tax return. For a sole proprietor, it appears on Form T2125 as part of the personal T1 return.
Booking the duty as a separate operating expense is one of the most common errors we see. It typically understates cost of goods sold, overstates gross margin, and can misalign inventory valuation for financial statement purposes.
For a broader GST and HST primer, see New GST/HST Rules: A Practical Guide for Canadian Business.
Federal Relief: Remission, the C$7.5B Envelope, and CUSMA
Tariff remission is a discretionary federal process. To qualify, a business generally must show that no reasonable Canadian or non-U.S. substitute exists for the imported input, and that the duty causes material harm. The Department of Finance evaluates applications case by case.
The C$7.5 billion support envelope has three main channels. The Canada Strong Diversification Fund supports capital maintenance and market diversification projects. The Business Development Bank of Canada's Pivot to Grow program offers financing to affected companies. Regional Development Agencies offer non-repayable grants for smaller regional projects.
CUSMA is not a relief program but a pre-emptive defence. If a U.S.-marked good meets the rules-of-origin test and you hold a valid Certificate of Origin, it may still enter Canada duty-free even under the counter-tariff regime.
For an operator's perspective, see Confused About Surtaxes? Get Expert Advice from ClearWealth.
Common Mistakes Ontario Importers Are Making Right Now
Since September 8, the same avoidable errors are showing up in client files across the province. Watching for these six can save meaningful money.
- → Assuming CUSMA (the Canada-United States-Mexico Agreement) exempts every U.S.-marked good. The exemption only applies when the product meets rules of origin and you hold a valid Certificate of Origin.
- → Treating the counter-tariff duty like HST. The duty is not recoverable; only GST or HST paid at the border may be claimed as an input tax credit.
- → Booking the duty as a separate operating expense. Capitalize it into inventory and expense it through cost of goods sold on Schedule 125 of the T2 return.
- → Missing the transit exemption because shipping documents do not clearly show the goods left the United States before September 8, 2026.
- → Applying to only one federal relief program when a business may qualify for two or three.
- → Passing 100 percent of the tariff to customers overnight instead of modelling staged price increases first.
Frequently Asked Questions
What tariffs did Canada put on U.S. goods on September 8, 2026?
Canada activated counter-tariffs on more than 700 U.S. products at 15%, 25%, and 50%, effective 12:01 a.m. Eastern Time on September 8, 2026. The rates match the U.S. tariff applied to the equivalent Canadian good under Section 232 and Section 338 measures.
Which American products are on Canada's counter-tariff list?
The list typically covers steel and aluminum, furniture, clothing, cheese and dairy, appliances, fish and seafood, electronics, and tools. The exact list runs to more than 700 products by HS code and is published and updated by the federal Department of Finance.
Are my goods exempt if they were already in transit before September 8?
Yes. Goods already in transit to Canada on September 8, 2026 are exempt from the counter-tariffs. Shipping documentation must clearly show the goods left the United States before that date, so keep bills of lading, air waybills, and CBSA release records on file.
Will CUSMA (USMCA) still let me bring U.S. goods into Canada duty-free?
Sometimes. CUSMA preferential treatment applies only when the product meets rules of origin and you hold a valid Certificate of Origin. Many U.S.-marked goods do not qualify because their inputs are sourced outside North America. Confirm with your customs broker before assuming duty-free entry.
Can I still claim the HST I pay at the border as an input tax credit?
Yes. HST paid at the border remains fully recoverable through the input tax credit on your GST/HST return, provided you are a registrant. The counter-tariff duty itself is separate and is not recoverable through the HST system.
How does the counter-tariff show up on my corporate tax return?
The duty is generally capitalized into inventory at the point of import. When the inventory sells, it flows through cost of goods sold on Schedule 125 of the T2 corporate return, reducing taxable income at your corporate rate.
How do I apply for tariff remission if I have no Canadian supplier alternative?
Tariff remission applications are filed with the federal Department of Finance. You typically need to demonstrate no reasonable Canadian or non-U.S. substitute exists, evidence of material harm, and detailed import documentation. Remission is discretionary and reviewed case by case.
What financial help is available for a small Ontario business hit by these tariffs?
The federal C$7.5 billion support envelope offers three main options: non-repayable grants through Regional Development Agencies, financing through the BDC Pivot to Grow program, and capital funding through the Canada Strong Diversification Fund. Many businesses may qualify for more than one program.
Talk to a ClearWealth Accountant
If your Ontario business imports from the United States, we can help you model the tariff impact, review your inventory treatment, and prepare your relief applications.
Book a ConsultationSources and References
- Department of Finance Canada — List of products from the United States subject to counter-tariffs effective September 8, 2026
- Government of Canada — Canada's response to U.S. tariffs on Canadian goods
- Canada Revenue Agency — GST/HST for businesses and input tax credits
- Canada Border Services Agency — Importing commercial goods into Canada
- Business Development Bank of Canada — Pivot to Grow program
- Blakes — U.S.-Canada Tariffs: Timeline of Key Dates and Documents
