Importing from Canada: USMCA, Duty Rates, and Customs Costs for U.S. Importers

What Are the Current U.S. Tariff Rates on Imports from Canada?

Most Canadian goods enter the U.S. duty-free under USMCA. As of January 2026, nearly 85% of imports from Canada claimed USMCA preferential treatment, producing effective tariff rates below 5% according to Penn Wharton Budget Model data. Non-USMCA goods face a 10% Section 122 surcharge. Products covered by Section 232 (steel, aluminum, autos, lumber, copper, semiconductors) face sector-specific tariffs of 25% to 50% regardless of USMCA status.

Does USMCA Eliminate All Tariffs on Canadian Goods?

No. USMCA eliminates tariffs only on goods that meet the agreement's rules of origin. Products that do not qualify under USMCA (because they contain too much non-North American content or fail to meet product-specific rules) are treated as standard MFN imports and face the 10% Section 122 surcharge. Additionally, Section 232 tariffs on steel, aluminum, autos, lumber, and copper apply even to USMCA-qualifying goods, with limited exceptions for certain auto parts.

Canada was the third-largest source of U.S. goods imports in 2024 at $412 billion, and the top destination for U.S. goods exports at $350 billion. The U.S. goods trade deficit with Canada was $46.4 billion in 2025. For importers sourcing energy, metals, lumber, autos, or agricultural products from Canada, the difference between USMCA-qualifying and non-qualifying treatment can be tens of thousands of dollars per shipment.

Last updated: March 2026

How USMCA Qualification Works

USMCA is the single most important factor in determining what you pay on Canadian imports. A product qualifies for USMCA preferential (typically duty-free) treatment if it meets one of three criteria:

Wholly obtained or produced in the USMCA territory (U.S., Canada, or Mexico)
Produced entirely from originating materials in one or more USMCA countries
Produced using non-originating materials that satisfy the product-specific rules of origin (tariff shift, regional value content, or both)

Regional Value Content (RVC) thresholds vary by product. The two calculation methods are:

Method	Typical RVC Threshold	Formula
Transaction Value Method	75%	(Transaction Value - Non-Originating Materials) / Transaction Value
Net Cost Method	65%	(Net Cost - Non-Originating Materials) / Net Cost

Automotive rules are the strictest. Passenger vehicles must contain at least 75% North American content (up from 62.5% under NAFTA), with additional requirements for core parts, principal parts, complementary parts, and a labor value content threshold.

The certification process is flexible: USMCA does not require a specific certificate of origin form. Certification can be made on an invoice or other commercial document, as long as it includes the nine required data elements from USMCA Annex 5-A. However, importers must maintain supporting documentation for five years and be prepared for CBP verification audits.

GingerControl is a trade compliance AI platform that helps importers, exporters, and customs brokers classify products, simulate tariff costs, and track policy changes. The Tariff Calculator models the difference between USMCA-qualifying and non-qualifying entries, so importers can quantify exactly how much they save with preference claims.

What Tariffs Apply to Non-USMCA Canadian Goods?

Canadian goods that do not meet USMCA rules of origin face the same tariff treatment as imports from any other MFN country:

Tariff Layer	Rate	Notes
MFN base duty	Varies by HTS code (0% to 30%+)	Standard duty rate
Section 122 surcharge	10%	Applies to non-USMCA goods not covered by Section 232
Section 232 (steel/aluminum)	50%	Applies regardless of USMCA status
Section 232 (autos/parts)	25%	USMCA carve-out for qualifying passenger vehicle parts
Section 232 (lumber/timber)	10% to 25%	Applies regardless of USMCA status
Section 232 (copper)	50%	Applies regardless of USMCA status
Section 232 (semiconductors)	25%	Applies regardless of USMCA status
AD/CVD duties	Varies	Softwood lumber, other specific products

The critical distinction: USMCA exempts qualifying goods from the Section 122 surcharge. It does not exempt goods from Section 232 tariffs (with limited exceptions for certain auto parts).

How Do Section 232 Tariffs Affect Canadian Imports?

Section 232 tariffs are the biggest cost driver for Canadian industrial imports. All country exemptions for Canada were eliminated in March 2025, and rates were increased to 50% on steel and aluminum in June 2025.

Steel and Aluminum (50%)

Canada was historically the largest foreign supplier of steel and aluminum to the U.S. The 50% Section 232 tariff applies to all steel and aluminum products and their derivatives, regardless of USMCA status. Canada has imposed retaliatory tariffs on C$15.6 billion ($11 billion) worth of U.S. steel and aluminum in response.

For derivative products (finished goods containing steel or aluminum), the 50% tariff applies to the steel or aluminum content, and the Section 122 surcharge (or applicable reciprocal tariff) applies to the remaining value.

Autos and Auto Parts (25%)

A 25% Section 232 tariff on passenger vehicles and certain auto parts took effect in 2025. USMCA-qualifying auto parts for passenger vehicles and light trucks may be eligible for relief from the Section 232 tariff. However, qualification requires meeting both USMCA rules of origin and specific Section 232 exemption criteria. Parts for medium and heavy-duty vehicles have separate rules.

Negotiated rates for certain trading partners set the auto/parts tariff at 15% for Japan, South Korea, and the EU. Canada and Mexico face the standard 25% on non-USMCA-qualifying vehicles and parts.

Softwood Lumber (10% to 25%)

Canadian softwood lumber faces a dual tariff burden: Section 232 tariffs of 10% to 25% (depending on product classification and origin), plus longstanding antidumping and countervailing duty orders. The combined rate can exceed 30% on certain lumber products. USMCA does not exempt lumber from Section 232 tariffs.

What About Dairy and Agricultural Tariff Rate Quotas?

Canada's dairy sector operates under a supply management system that limits production, sets prices, and restricts imports. Under USMCA, Canada committed to providing greater access for U.S. dairy exports through 14 U.S.-specific tariff-rate quotas (TRQs).

For U.S. importers bringing Canadian dairy products into the U.S., standard MFN rates apply. Dairy products not covered by preferential quotas can face tariffs exceeding 20%.

Agricultural products that qualify under USMCA generally enter duty-free. Non-qualifying agricultural goods face MFN rates plus the 10% Section 122 surcharge.

USTR has challenged Canada's dairy TRQ administration twice under USMCA dispute settlement, with mixed results. In June 2025, Canada enacted legislation preventing the government from increasing dairy TRQs or reducing over-quota tariffs in future negotiations.

How to Calculate Total Duty on a Canadian Import

Example: Non-USMCA steel pipe from Canada

Component	Rate	Amount (on $100,000 CIF)
MFN base duty (HTS 7306.30)	0%	$0
Section 232 (steel)	50%	$50,000
Section 122	N/A (Section 232 primacy)	$0
MPF	0.3464% (max $614.35)	$346.40
HMF	0.125%	$125
Total		$50,471.40
Effective rate		~50.5%

Example: USMCA-qualifying manufactured goods from Canada

Component	Rate	Amount (on $100,000 CIF)
MFN base duty	3.5%	$0 (USMCA preference: duty-free)
Section 122	0% (USMCA exempt)	$0
MPF	0.3464% (max $614.35)	$346.40
HMF	0.125%	$125
Total		$471.40
Effective rate		~0.5%

The difference between USMCA-qualifying and non-qualifying is dramatic. Use GingerControl's Tariff Calculator to model both scenarios for your specific HTS codes and see the exact cost difference.

FAQ

Do I need a certificate of origin for USMCA?

No formal certificate is required. USMCA allows certification on any commercial document (invoice, letter, etc.) as long as it contains the nine required data elements from Annex 5-A. The importer, exporter, or producer can make the certification. Records must be maintained for five years.

Are energy imports from Canada subject to tariffs?

Canadian energy products that qualify under USMCA enter duty-free. Non-qualifying energy products face the 10% Section 122 surcharge. Under the previous IEEPA regime, non-USMCA Canadian energy faced a 10% tariff (compared to 35% on other non-USMCA goods), but those rates were invalidated when the Supreme Court struck down IEEPA tariffs.

Does USMCA protect Canadian steel and aluminum from Section 232?

No. Section 232 tariffs on steel (50%) and aluminum (50%) apply to Canadian products regardless of USMCA qualification. Canada is the largest foreign supplier of both metals to the U.S., and these tariffs have been a major point of contention in the bilateral relationship.

What happens to USMCA during the 2026 joint review?

The USMCA includes a mandatory joint review scheduled for July 2026. All three countries will assess the agreement's performance and decide whether to extend it. U.S. Commerce Secretary Howard Lutnick has indicated the administration intends to renegotiate USMCA. Changes could affect rules of origin, tariff preferences, and sector-specific provisions.

How much can I save by qualifying under USMCA?

The savings are substantial. Without USMCA, non-Section 232 Canadian goods face MFN duty plus a 10% Section 122 surcharge. With USMCA, those same goods enter duty-free. On a $500,000 shipment of manufactured goods with a 4% MFN rate, that is a difference of $70,000 in duties.

Can GingerControl calculate USMCA vs. non-USMCA duty scenarios?

Yes. GingerControl's Tariff Calculator covers the full U.S. tariff stack for Canadian-origin goods, including USMCA preference treatment, Section 232, Section 122, and AD/CVD interactions. Enter your HTS code, select Canada as the origin, and compare USMCA-qualifying versus non-qualifying scenarios.

Calculate Your Canada Import Duties

The gap between USMCA-qualifying and non-qualifying Canadian imports has never been wider. With Section 232 tariffs at 50% on metals, 25% on autos, and the 10% Section 122 surcharge on everything else, getting your USMCA qualification right is worth real money. GingerControl's Tariff Calculator provides transparent, date-sensitive calculations across the full duty stack. Try it free →

GingerControl is not just a tool. We work with importers and trade compliance teams on process consulting, digital transformation strategy, and end-to-end custom system development. Talk to our team →

References

[REF 1] CRS — US-Canada Trade Relations Data cited: Canada as third-largest import source ($412B in 2024), top export destination ($350B), USMCA dairy TRQ disputes Source: CRS IF12595 Published: 2026

[REF 2] Penn Wharton Budget Model — Effective Tariff Rates Data cited: 85% USMCA claim rate, Canada/Mexico ETR below 5%, steel/aluminum ETR at 41.1% Source: Penn Wharton Published: March 16, 2026

[REF 3] CRS — Expanded Section 232 Tariffs on Steel and Aluminum Data cited: Canada retaliatory tariffs of C$15.6 billion, 50% steel/aluminum rate, derivative stacking Source: CRS IN12519 Published: 2025

[REF 4] BEA — U.S. International Trade in Goods and Services, Annual 2025 Data cited: U.S. goods trade deficit with Canada of $46.4 billion in 2025 Source: BEA Trade Release Published: February 2026

[REF 5] White House — Section 122 Fact Sheet Data cited: 10% surcharge, USMCA exemption, Section 232 primacy Source: White House Published: February 20, 2026

[REF 6] CRS — Presidential 2025 Tariff Actions Timeline Data cited: Section 232 rates, USMCA carve-outs for auto parts, negotiated rates by country Source: CRS R48549 Published: 2026

[REF 7] Global Trade Alert — US Tariff Stacking Explained Data cited: Steel/aluminum derivative stacking rules, timber tariff ranges, USMCA interaction Source: Global Trade Alert Published: 2025