Effective , motor vehicles originating in the U.S. and imported into Canada are subject to a surtax in the amount of 25% of the value for duty in accordance with the United States Surtax Order (Motor Vehicles 2025). The value for duty is determined in accordance with sections 47 to 55 of the Customs Act. Schedules 1 and 2 to the United States Surtax Order (Motor Vehicles 2025) contain a complete list of goods subject to the surtax.
Both new and used motor vehicles are subject to the surtax, including motor vehicles with electric motors and motor vehicles with internal combustion piston engines. Motor vehicles subject to the surtax may include the following:
- Motor cars and other motor vehicles principally designed for the transport of less than ten persons, including the driver. Examples of subject goods include passenger cars, including racing cars and stations wagons; other cars, including crossovers, sport utility vehicles and passenger vans; motorhomes; and ambulances, hearses or prison vans.
- Motor vehicles for the transport of goods with a gross vehicle weight not exceeding 5 tonnes, other than those for conversion to ambulances, and motor vehicles for the transport of goods with only electric motor for propulsion.
For clarity, motor vehicles not subject to the surtax include, but are not limited to, vehicles specifically designed for travelling on snow, golf cars and similar vehicles (goods of Tariff Item No. 8703.10); and motor vehicles with only spark-ignition internal combustion piston engine of a cylinder capacity not exceeding 1,000 cc (goods of Tariff Item No. 8703.21).
The surtax applies even if the motor vehicle qualifies for preferential tariff treatment under the Canada–United States–Mexico Agreement (CUSMA).
- If a motor vehicle is entitled to the United States Tariff (the CUSMA preferential tariff treatment duty rate), the value of all goods that originate in Canada or Mexico that are used in the production of the motor vehicle are excluded from the value for duty of the motor vehicle for the purposes of calculating the surtax.
- As a means to account for the assumed value of all goods that originate in Canada or Mexico that are used in the production of the motor vehicle, 15% of the value for duty of the motor vehicle will be excluded from the value for duty for the purposes of calculating the surtax (i.e., the value for duty for the surtax is calculated at 85% of the total value for duty of the goods).
- To claim a higher exclusion amount, the importer should obtain evidence of the value of goods that originate in Canada or Mexico used in the production of the motor vehicle and provide it to a CBSA official upon request. In such cases, importers are expected to obtain sufficient supporting information (e.g. a valid CUSMA certification of origin, records substantiating compliance with Regional Value Content (RVC), core parts, steel/aluminum and Labour Value Content (LVC), value for duty documentation, and documentation of Canadian/Mexican parts used). Importers electing to obtain and retain such evidence are encouraged to use the Release Prior to Payment (RPP) program.
Where goods have been accounted for and the surtax has been calculated as described in paragraph 6c, the CBSA may conduct a verification to ensure that the value for duty used for the purposes of calculating the surtax does in fact qualify as originating in the corresponding territory and in the corresponding amounts claimed. In certain circumstances, such as where the origin of the good is changed because a material used in the production of the good is determined to be non-originating or where the CBSA is denied access to records, the CBSA may re-calculate the amount of surtax owing based on the 15% content amount described in paragraph 6b. Refer to Memorandum D11-4-20: Procedures for verifications of origin under a free trade agreement with non-European countries for details.
The surtax only applies to motor vehicles that originate in the U.S. The determination of whether goods originate in Canada, the United States or Mexico is to be made in accordance with sections 2, 4 to 8 and 10 to 13 of the Determination of Country of Origin for the Purpose of Marking Goods (CUSMA Countries) Regulations. The surtax does not apply to goods eligible to be marked as originating from Puerto Rico, Guam, the Northern Mariana Islands, American Samoa or the U.S. Virgin Islands.
The surtax applies to motor vehicles identified in Schedule 1 to the United States Surtax Order (Motor Vehicles 2025) that are imported for commercial and personal purposes, even when exported from a country other than the U.S. into Canada.
The surtax does not apply to goods eligible for classification in the tariff items of Chapter 98 of the Schedule to the Customs Tariff, other than goods eligible for classification under tariff items listed in Schedule 2 to the United States Surtax Order (Motor Vehicles 2025). Chapter 98 includes temporary importations under specific conditions, traveler exemptions and other such tariff items.
The surtax does not apply to goods eligible for classification in the tariff items of Chapter 99 of the Schedule to Canada’s Customs Tariff, with the exception of goods eligible for classification under 9966.00.00 (vehicles and parts manufactured more than 25 years before the date of importation), 9971.00.00 (temporary exports of vessels for repair or alteration), and 9989.00.00 (articles produced more than 50 years prior to the date of accounting, other than antiques of an age exceeding 100 years, spirits or wines). Chapter 99 includes tariff items that would allow goods to receive a duty free rate or reduced duty rate.
The surtax is remitted for goods (both casual and commercial) eligible for remission under the Akwesasne Residents Remission Order.
Canada’s Duties Relief and Duty Drawback Programs will be available for surtax paid or payable, subject to the provisions of the Canada-United States-Mexico Agreement (CUSMA).
