21 April 2025 Canada | Latest relief measures for Canadian businesses impacted by US tariffs
On 15 April 2025, the Minister of Finance announced a series of relief measures for Canadian businesses affected by the recent tariffs imposed by the United States (US). Certain importers of motor vehicles from the US have been granted remission of the 25% surtax imposed by the Government of Canada in response to US tariffs on automobiles and automobile parts. The parameters for obtaining remission are contained in the United States Surtax Remission Order (Motor Vehicles 2025) (Motor Vehicle Remission Order), released on 15 April 2025. Further guidance can also be found in Customs Notice 25-17: United States Surtax Remission Order (Motor Vehicles 2025), published by the Canada Border Services Agency (CBSA) on 15 April 2025 and updated on 17 April. Certain Canadian businesses may also benefit from additional relief measures. A temporary six-month relief period from the payment of tariffs on US-origin products has been granted for certain sectors, such as manufacturing and processing, as well as goods used to support public health and safety. The parameters for obtaining relief are contained in the United States Surtax Remission Order (2025) (Surtax Remission Order), released on 16 April 2025. Further guidance can be found in Customs Notice 25-19: United States Surtax Remission Order (2025), which the CBSA published on 17 April 2025. In addition, the Large Enterprise Tariff Loan (LETL) facility is now accepting applicants. The LETL facility, which Prime Minister Mark Carney initially announced on 21 March 2025, is intended to support large Canadian businesses that may be finding it difficult to secure traditional sources of financing due to current uncertain economic conditions. As previously noted in EY Global Tax Alert, Canada | Latest Canada-US trade developments — as of 10 April 2025, dated 16 April 2025, a Presidential Proclamation was issued on 26 March 2025 declaring a 25% tariff on all automobiles imported into the US, effective 3 April 2025, along with a 25% tariff on automobile parts that will come into effect on 3 May 2025. On 3 April 2025, the Government of Canada announced a 25% surtax as a countermeasure in response to the US tariffs imposed on automobiles and automobile parts, effective 9 April 2025. The surtax applies only to motor vehicles that originate in the US. The determination of whether goods originate in Canada, the US or Mexico must be made in accordance with Canada's Determination of Country of Origin for the Purpose of Marking Goods (CUSMA Countries) Regulations. Specifically, the surtax applies to motor vehicles identified in Schedule 1 of the United States Surtax Order (Motor Vehicles 2025) (Motor Vehicle Surtax Order) that are imported for commercial and personal purposes, even when those motor vehicles are imported into Canada from countries other than the US. New and used motor vehicles are subject to the surtax (including motor vehicles with electric motors and motor vehicles with internal combustion piston engines), subject to certain exemptions.1 The Government of Canada announced it would introduce a remission framework to minimize the negative effects of the surtaxes on Canadian motor vehicle companies. The Motor Vehicle Remission Order allows certain Canadian automakers to import a certain number of Canada-United States-Mexico Agreement (CUSMA)-compliant vehicles that have been assembled in the US without the payment of the 25% surtax. If the conditions of the Motor Vehicle Remission Order are met, importers may claim relief for surtaxes paid or payable under subsection 2(2) of the Motor Vehicle Surtax Order. An importer is defined as a person with a business number set out in the schedule2 to the Motor Vehicle Remission Order that both manufactures motor vehicles in Canada and imports them from the US for the purpose of sale in Canada. Remission of surtaxes paid or payable under the Motor Vehicle Surtax Order will be granted to an importer if:
Remission claimed by an importer will be limited to the maximum quantity of vehicles set out in the schedule3 of the Motor Vehicle Remission Order. An importer may obtain surtax relief by entering special authorization code 25-0465 in the Special Authority OIC field on the Commercial Accounting Declaration for goods listed in Schedule 1 of the Motor Vehicle Surtax Order. Any claim for remission must include all relevant documents (e.g., commercial invoices, Canada customs invoices, bills of lading) showing that the imported motor vehicles meet the requirements for remission. For more information about obtaining remission, see Customs Notice 25-17: United States Surtax Remission Order (Motor Vehicles 2025). The government will provide a temporary six-month relief period for goods imported from the US that are used both:
Specifically, the Surtax Remission Order provides relief for surtaxes paid or payable under the United States Surtax Order (2025-1), the United States Surtax Order (Steel and Aluminum 2025), or the Motor Vehicle Surtax Order in respect of goods imported by or on behalf of various authorities. These include government health research organizations, public health officials, firefighting services, law enforcement agencies, the Canadian Forces and the Department of National Defence. In addition, remission is provided for surtaxes paid or payable under the orders listed above in respect of goods imported for use in medically necessary health care services provided at hospitals, long-term care facilities, healthcare or dental clinics and certain laboratories. Relief is also available for goods imported by or on behalf of either:
As a general relief measure, remission is available for surtaxes paid or payable under the United States Surtax Order (2025-1) in respect of goods listed in the schedule to the Surtax Remission Order, regardless of the importer's identity. These goods include specialized infant formulas, medical compression garments, and sterile barrier film or pouches used in medical manufacturing. Finally, an importer may claim remission for surtaxes paid or payable under the United States Surtax Order (2025-1) or the United States Surtax Order (Steel and Aluminum 2025) in respect of goods imported for use in manufacturing or processing of any good, or packaging of food products and beverages.
This measure is intended to support a wide range of Canadian businesses that rely on US inputs, as well as entities that play a central role in health and safety. It is anticipated that the six-month window will provide businesses and entities with sufficient time to reorganize their supply chains and make use of domestic supply sources, if feasible.4 For more information about obtaining remission, see Customs Notice 25-19: United States Surtax Remission Order (2025). The Minister of Finance also indicated that the LETL facility is now accepting applicants. This measure is intended to provide financial support in the form of interest-bearing loans to large Canadian businesses that are encountering difficulties in obtaining financing from traditional market sources. Eligible enterprises are businesses that have been or expect to be affected by recent tariffs and countermeasures and that:
For-profit businesses in all sectors that meet these criteria may apply for funding, as may certain nonprofit entities. 5 Notably, the LETL facility is intended for businesses that were viable before the imposition of the tariffs and countermeasures. It will not be available to businesses that are insolvent or that have filed for creditor protection. The loan is subject to various terms and conditions, including that the rate applicable to the unsecured facility is Term Canadian Overnight Repo Rate Average (CORRA) and that the business has an overall plan to return to financial stability. Interested parties should review the LETL facility criteria to determine their eligibility and email a completed inquiry form to info@ceefc-cfuec.ca.
Document ID: 2025-0928 | ||||||||
