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The Canada Border Services Agency ("CBSA") recently amended its guidance on retaliatory tariff relief or remission available under the April 16, 2025, United States Surtax Remission Order (2025).
We previously discussed the scope of the Remission Order in a previous post, "Trade War Update: Relief for some as Canada orders six-month reprieve on retaliatory tariffs on a wide range of imported goods". Included in the Remission Order was relief from retaliatory surtaxes imposed on goods imported for use in manufacturing or processing, or packaging of food and beverages, of goods in Canada. However, there were significant questions regarding the scope of the Remission Order, and particularly regarding whether indirect inputs for manufacturing could be eligible for remission. These issues were not addressed by the Customs Notice initially issued by CBSA together with the Remission Order. In fact, if anything, the Customs Notice seemed to indicate that the scope of the Remission Order was quite broad.
CBSA Purports to Limit the Remission Order
On May 20, 2025, without any accompanying press release or publicity, the CBSA updated the Customs Notice to provide its interpretation on scope. The revised Customs Notice purports to significantly constrain the Remission Order for both goods related to manufacturing and processing and goods imported for the packaging of food and beverages. It does this by providing clarity on what it considers not subject to remission.
Restrictions on Goods for Manufacturing or Processing
The CBSA clarifies three points regarding its views on the scope of goods imported for use, in Canada, in the manufacture or processing of any good.
First, it qualifies the remission by noting it only applies to businesses that are acting as manufacturers. The CBSA provides examples of imported goods that are not eligible for remission: goods used in primary material production (for example, farm machinery for use in harvesting grain, even if that grain is then processed in Canada), goods intended for construction/infrastructure purposes, and goods that may be further processed by a non-manufacturing business (for example, a restaurant importing food products).
Second, the CBSA interprets the Remission Order as only applying to "manufacturing machinery and direct inputs which become an integral part of the finished product [...]". The CBSA's interpretation expressly excludes any imports of indirect inputs (such as fuel or lubricants), transportation items (such as replacement tires for vehicles supporting manufacturing processes), or facility upkeep items (such as soap for use in manufacturing facilities).
Third, the CBSA clarifies that the importation of the goods does not have to be by the manufacturing entity itself. Remission is available for a third-party non-manufacturer who imports the goods for immediate sale to a manufacturer. However, it should be noted here that it is only for immediate sale; in other words, non-manufacturing entities cannot purchase, import, and warehouse goods for potential future sale to a manufacturing entity.
Restrictions on Goods for Packaging of Food
The CBSA also places limits on the Remission Order by clarifying that goods imported for "packaging of a food product or beverage" do not include the food products or beverages themselves. While it could be argued that imported peanuts, packaged in Canada, should be viewed as being imported for packaging of food products, the CBSA's view is that it is only the materials for packaging, and not the food products themselves, that are covered (unless they independently fall within the manufacturing or processing category).
Further, in the CBSA's view, this aspect of the Remission Order only applies to packaging imported for commercial purposes; packaging imported for persons to package food items in a non-commercial or domestic setting are excluded. In addition, the CBSA explicitly states that remission is restricted to the packaging of food for human consumption, and that goods imported for packaging animal food are not eligible. No such express prohibition is contained in the Remission Order.
Customs Notice Impacts
The updates to the Customs Notice provide additional clarity on the administrative position of the CBSA, but also appear to significantly restrict the scope of the Remission Order. Importers that have already relied on the Remission Order to claim relief from the payment of retaliatory surtaxes should carefully consider whether their imports meet the new criteria set out by the CBSA, and if they do not, consider whether it may be necessary to file a disclosure with the CBSA. They should also consider whether future imports would be covered under the CBSA's narrow interpretations.
It is also important to note that the Customs Notice represents the interpretation and position of the CBSA. It is neither binding nor determinative. Arguably, the Customs Notice adopts interpretations that significantly narrow the scope of the Remission Order and improperly usurps the position of the Governor in Council by imposing additional conditions on the availability of remission which are outside the three express conditions set out in the Remission Order. Importers with surtax liability due to the revised CBSA position may therefore also consider challenging or appealing any assessment of surtax or denial of remission.
McCarthy Tétrault's International Trade and Investment Law Group has significant experience with remissions and engaging with both the CBSA and the Department of Finance on these matters. Further, we have advised, and continues to advise, a large number of clients in a variety of industries on how to navigate the uncertainty caused by the U.S. tariffs and the Canadian countermeasures.
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