The importance of origin in trade with the United States
Companies that produce goods in Canada for export to the United States (US) are facing customs and trade issues that have been dormant for decades. This is particularly true where their goods contain significant foreign-sourced raw materials. The issues have arisen from two recent initiatives of the Trump administration.
First, effective March 4, 2025, the US imposed a 25% tariff on imports of goods originating in Canada which do not qualify as originating under the USMCA Rules of Origin. Canadian manufacturers whose goods are duty free under the general American tariff schedule have been forced to confront these two different concepts of “origin” for the first time. Some Canadian manufacturers whose goods are subject to low tariffs under the general tariff schedule have also decided to take a closer look at their origin determinations.
Second, in early February, the US began ramping up the tariffs it imposes on goods originating in China. By early May, the blanket tariff on all Chinese goods had increased to 145%, in addition to the general tariff schedule rate and special tariffs imposed on certain goods, such as steel and aluminum products. The Trump administration recently reduced the blanket 145% tariff to 30% for a 90-day “cooling off” period. In response to this initiative and the uncertainty it has created, some American manufacturers that use significant Chinese raw materials have begun looking north to assemble their goods in Canada, which does not impose a blanket tariff on goods of Chinese origin. Some Chinese manufacturers that rely on access to the American market are looking at assembling a portion of their goods in Canada.
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