Customs Notice 25-15: United States Surtax Order (Motor Vehicles 2025)

Ottawa, April 8, 2025

1. This notice provides information on the application of the United States Surtax Order (Motor Vehicles 2025), specifically regarding surtax provisions effective April 9, 2025, on motor vehicles that originate in the United States (U.S.).

2. The surtax is introduced by Canada in response to the U.S.’ imposition of tariffs on Canadian-made vehicles and auto parts imported into the U.S. from Canada.

3. The administration of the United States Surtax Order (Motor Vehicles 2025) is the responsibility of the Canada Border Services Agency (CBSA).

Application

4. Effective April 9, 2025, 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.

5. 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).

6. The surtax applies even if the motor vehicle qualifies for preferential tariff treatment under the Canada–United States–Mexico Agreement (CUSMA).

1. 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.
2. 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).
3. 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.

7. 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.

8. 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.

9. 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.

10. 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.

11. 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.

12. The surtax is remitted for goods (both casual and commercial) eligible for remission under the Akwesasne Residents Remission Order.

13. 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).

Proof of origin

14. Pursuant to subsection 35.1(1) of the Customs Act, proof of origin must be furnished for all imported goods subject to exceptions set out in the Proof of Origin of Imported Goods Regulations and Customs Notice 20-22: The Canada-United States-Mexico Agreement’s (CUSMA) Regulatory Amendments and New Regulations Made Pursuant to the Customs Act.

15. For commercial goods, proof of origin may be in the form of a commercial invoice or any other documentation that contains the minimum data elements as set out in Annex 5-A (Minimum Data Elements) of CUSMA and replicated in Appendix H of Memorandum D11-4-2: Proof of Origin of Imported Goods.

16. Personal importations of goods, also known as casual goods (meaning goods that are imported into Canada other than commercial goods) are considered to originate in the U.S. when the goods are marked as a good of the U.S., or the goods have no country of origin marking and there is no evidence that the goods are the product of a country other than the U.S.

17. Casual goods imported from a country other than the U.S. that are marked as made in, produced in or originating in the U.S. are considered to originate in the U.S.

Calculation of surtax when accounting for commercial importations

18. The amount of surtax payable is calculated in the amount of 25% of the value for duty of the imported good in accordance with the United States Surtax Order (Motor Vehicles 2025). This is in addition to any other duties owing (e.g. in addition to Most Favoured Nation (MFN) duties).

19. The value for duty must be established in accordance with sections 45 to 55 of the Customs Act. Refer to the Customs valuation handbook for more details.

20. Under the transaction value method, transportation and associated costs, and insurance costs, arising after the place from which goods begin their direct and uninterrupted journey to Canada would not be included in the transaction value of the goods. Any amounts for Canadian customs brokerage fees which are included in the price paid or payable may be deducted as associated costs and as such are not included in the transaction value of the goods. Estimates of the transportation costs are not acceptable. Refer to Memorandum D13-3-3: Transportation and Associated Costs, Memorandum D13-3-4: Place of Direct Shipment, and Memorandum D13-4-7: Adjustments to the Price Paid or Payable (Customs Act, Section 48) for details.

Exceptions to surtax

21. The surtax will not apply to U.S. goods that are in transit to Canada on the day on which the surtax comes into force. This includes goods that were in transit before the surtax comes into force. For the purpose of this Customs Notice, ‘in transit to Canada’ refers to goods bound for but not yet arrived in Canada, and under the control of a carrier. Importers must have proof in their possession that such goods were in transit to Canada in order to demonstrate that the surtax is not applicable. Such proof may include the following documentation: shipping documents (for example, a bill of lading), report of entry documents, and cargo control documents. Such proof may be requested at any time by a CBSA officer.

22. In the following scenarios and in accordance with the United States Surtax Order (Motor Vehicles 2025), the importation would not be subject to the surtax:

• The temporary importation of foreign motor vehicles – for example, a U.S.-registered truck moving cargo, or a U.S.–registered electric vehicle driven into Canada by a U.S. tourist.
• Returning Canadian-registered motor vehicles that are made in the U.S. and duty-paid – for example, a Canadian tourist is returning from the U.S. in an vehicle of U.S. origin (such motor vehicles would have previously been released and accounted for under the Customs Act before its sale to the Canadian owner).
• Motor vehicles that are made in U.S. and are repaired or altered across the border – for example, a U.S.–registered vehicle repaired in Canada, or Canadian-registered vehicle repaired in the U.S – including an emergency or non-emergency repair for both scenarios.

Accounting

23. Importers must declare imported goods as subject to a surtax when completing a Commercial Accounting Declaration (CAD) via CARM Client Portal (CCP), Electronic Data Interchange (EDI) or Application Programming Interface (API) and declare the applicable surtax code. The amount of surtax owing is entered in field 85 “Surtax” of the CAD.

24. If importers elect to use the self-declare option in CARM, the amount of surtax owing must be calculated by the importer and entered in the Surtax field.

25. The surtax code is 25118A for motor vehicles that are not entitled to the United States Tariff. See Example 1 under “Calculation of Surtax when Accounting for Commercial Importations” for details on the calculation of surtax.

26. The surtax code is 25118B for motor vehicles that are entitled to the United States Tariff and for which the declared value of Canadian and Mexican-origin parts used in the vehicle’s production is no greater than 15%. See Example 2 under “Calculation of Surtax when Accounting for Commercial Importations” for details on the calculation of surtax.

27. The surtax code is 25118C for motor vehicles that are entitled to the United States Tariff and for which the declared value of Canadian and Mexican-origin parts used in the vehicle’s production is greater than 15%. See example 3 under “Calculation of Surtax when Accounting for Commercial Importations” for details on the calculation of surtax. Importers making a declaration using this surtax code must calculate the surtax payable as per example 3 and manually self-declare the amount of surtax owing.

28. To claim CUSMA preferential tariff treatment, importers must select “United States Tariff (UST)” in their CARM declaration and the vehicle must meet all CUSMA requirements including rules of origin. UST must be declared to be eligible for any surtax deduction using surtax codes 25118B or 25118C.

29. Accounting for surtax under the United States Surtax Order (Motor Vehicles 2025) will follow the instructions outlined in Memorandum D16-1-1: Information pertaining to the application, collection, and adjustment of a surtax.

30. Commercial goods qualifying for an exception to a surtax must be declared as non-subject to surtax at the time of accounting.

31. When an amount of surtax is being declared at importation, refer to Memorandum D17-1-10: Coding of Customs Accounting Documents for additional information on completing the CAD.

32. Casual goods will be accounted for in accordance with Memorandum D17-1-3: Casual Importations.

Corrections, re-determinations, and refunds

33. Corrections or adjustments to original declarations and requests for re-determinations are to be made in the prescribed form and manner under the relevant provisions of the Customs Act, in accordance with the procedures outlined in Memorandum D11-6-6: 'Reason to Believe' and Self-Adjustments to Declarations of Origin, Tariff Classification, and Value for Duty, Memorandum D6-2-3: Refund of Duties and Memorandum D6-2-6: Refund of Duties and Taxes on Non-commercial Importations.

34. If surtax was not correctly self-assessed or was self-assessed in error for commercial goods, then an adjustment to the CAD may be submitted via the CCP or via EDI/API. For more information on how to submit an adjustment for commercial goods, refer to Memorandum D17-2-1: Adjusting Commercial Accounting Declarations.

35. If an adjustment is required for casual goods, including those accounted for on a CAD, a request must be made using a Form B2G, CBSA Informal Adjustment Request. Adjustments for casual goods cannot be submitted through CARM. For more information on casual refunds please refer to Memorandum D6-2-6: Refund of Duties and Taxes on Non-Commercial Importations.

36. The origin, tariff classification, and value for duty of imported goods may be re-determined or further re-determined in accordance with the Customs Act and the Determination, Re-determination and Further Re-determination of Origin, Tariff Classification and Value for Duty Regulations. This may occur further to a self-adjustment. In so doing, as with customs duties and taxes, the CBSA may consider the applicability of any undeclared amount of surtax.

Examinations and verifications

37. Imported goods may be subject to examination at the time of importation and to post-release verification for compliance with the Tariff Classification, Valuation, Origin, and any other applicable provisions administered by the CBSA. In cases of non-compliance, in addition to the imposition of surtax, customs duties and taxes, penalties may be assessed, and interest may accrue on the amount owing.

Advance rulings for commercial importations

38. For predictability and certainty on how goods are to be accounted for, a binding ruling on the Free Trade Agreement (FTA) Origin, tariff classification, or marking of goods imported from a Canada-United States-Mexico Agreement (CUSMA) country in advance of the importation of goods can be requested under the Customs Act. Refer to the Rulings for tariff classification, valuation, origin, and marking: Overview, Memorandum D11-4-16: Advance Rulings for Origin Under Free Trade Agreements and Memorandum D11-11-3: Advance Rulings for Tariff Classification for additional information.

Recourse

39. In accordance with the Customs Act, and section 12 of the Customs Tariff Act, those who have received a notice of re-determination or further re-determination under s.59(2) of the Act, may request review under s.60 of the Customs Act within 90 days and after having paid amounts owed. Refer to Memorandum D11-6-7: Request under Section 60 of the Customs Act for a Re-determination, a further Re-determination or a Review by the President of the Canada Border Services Agency for details.

Additional information

40. Refer to Memorandum D16-1-1: Information pertaining to the application, collection, and adjustment of a surtax, for additional information concerning the administration and enforcement of surtax orders under sections 53(2), 55(1), 60, 63(1), 68(1), 77.1(2), 77.6(2) or 78(1) of the Customs Tariff.

41. For more information call the Border Information Service (BIS) at 1-800-461-9999 (toll-free in Canada and the USA). If calling outside Canada and the United States, call 1-204-983-3500 or 1-506-636-5064. Long distance charges will apply. Our automated telephony service provides general information in English and French on CBSA programs, services and initiatives through recorded scripts. Live agents are also available to assist you Monday to Friday 8 am to 4 pm local time, as per time zones in Canada and USA (closed on federal statutory holidays). TTY is also available within Canada: 1-866-335-3237. Alternatively, you may send your enquiries using our Client Support Contact Form.

Related links

• United States Surtax Order (Motor Vehicles 2025)
• Customs Act
• Customs Tariff
• Memorandum D6-2-6: Refund of Duties and Taxes on Non-commercial Importations
• Memorandum D8-2-26: Goods Returned After Repair or Alteration in the United States, Mexico, Chile, Israel or Another CIFTA Beneficiary, Colombia, Costa Rica, Peru, Jordan or Panama
• Memorandum D11-6-7: Request under Section 60 of the Customs Act for a Re-determination, a further Re-determination or a Review by the President of the Canada Border Services Agency
• Memorandum D16-1-1: Information pertaining to the application, collection, and adjustment of a surtax
• Memorandum D17-2-1: Adjusting Commercial Accounting Declarations