While not much has changed this year with the USMCA trade agreement between the United States, Canada and Mexico, that doesn’t mean there haven’t been developments that could affect importers and exporters.
One in particular could make a big difference.
The U.S. recently announced new tariffs on Canadian goods under Section 338 – under the primary categories of automotive, alcoholic beverages and dairy. These tariffs, which are scheduled to go into effect on August 19, are set to be as high as 50 percent.
As is always the case when tariffs are announced, they could conceivably be canceled or lowered before the implementation date. But for now, importers and exporters need to be getting ready for implementation.
And while the announced tariffs sound straightforward enough, but there are two subtle details you need to know:
First, unlike previous similar tariffs, these particular tariffs on imported Canadian goods do not come with exemptions under the USMCA. That’s a change from previous tariffs, which in some cases fell into very similar categories but did have protections under USMCA.
Second, the categories described above don’t necessarily tell the whole story of the tariffs. For example, one item subject to tariffs and falling under the “alcoholic beverages” category is hockey equipment.
You read that right.
The new tariffs apply to commodities with some very obscure HTS codes, and you can’t safely assume anything from the three broad categories.
So if you’ve been importing from Canada and have so far been able to avoid tariffs because of USMCA protections, you will want to review the new Section 338 commodities so you will be prepared if anything has changed relative to the goods you’re importing.
Of course, we’re way ahead of you on that so just put in a call to your representative here at Bestway and we will be glad to brief you on everything.
Otherwise, USMCA stays pretty much as it’s been. There was no 16-year extension announced, but the agreement is still in effect for another 10 years unless someone opts out or the parties decide to make changes.
One thing to keep in mind is that any of the three nations can decide at any time to leave the agreement by giving six months’ notice. That is not very likely but the agreement would allow for it.
For now, the critical detail for importers and exporters is to know their obligations under the new Section 338 tariffs. We’re here to help.
