By Len Fleisig
35% U.S. Tariff Announced on Canadian Imports Effective August 1 – Key Legal and Operational Questions
On July 2, 2025, the U.S. government, via a public post on the social media platform Truth Social, announced the imposition of a 35% tariff on goods entering the United States from Canada, effective August 1, 2025. This unexpected declaration, made outside traditional diplomatic or regulatory channels, raises significant legal and operational uncertainties for importers, brokers, and Canadian exporters.
This update identifies key unresolved questions stemming from the announcement and outlines the preliminary considerations for affected stakeholders.
Key Legal and Operational Questions
1. Interaction with Existing 25% Tariff on Non-USMCA-Compliant Goods
It is unclear whether the new 35% tariff is to be stacked on top of the existing 25% tariff imposed on non-USMCA-compliant goods, resulting in a combined 60% duty, or whether it is intended to supersede the current 25%.
2. Status of USMCA-Compliant Goods
The announcement provides no guidance on whether USMCA-compliant goods, which are currently exempt from the 25% duty, will retain their duty-free status under the new tariff regime.
3. Stacking with Sector-Specific Tariffs (e.g., Steel, Aluminum, Copper)
It remains to be seen whether the 35% tariff will apply in addition to existing tariffs on Canadian steel and aluminum, and the anticipated copper duties, or whether it will replace those duties. The stacking or substitution of sectoral tariffs has broad implications for cost planning and customs classification strategies.
4. Impact on Entry Filing Procedures for Bulk Commodities
For products such as natural gas, which are currently eligible for monthly entry filings, it is unclear whether the new tariff would trigger a requirement for daily filings. A shift to daily filing would impose a significant administrative burden on importers, customs brokers, and CBP, potentially resulting in tens of thousands of additional entry transactions per month.
5. Treatment of U.S.-Origin Components in Canadian Goods
The announcement does not clarify whether goods of Canadian origin containing significant U.S. content—common under integrated North American supply chains—will receive a partial or full exemption from the tariff.
Additional Legal and Policy Concerns
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Misstatement of Tariff Liability
The announcement inaccurately states that the U.S. will “charge Canada a 35% tariff.” Legally, tariff liability falls on U.S. importers, not the foreign exporting nation. This misstatement, while perhaps rhetorical, may add to the confusion surrounding implementation and enforcement. -
Questionable Communication Methodology
Announcing significant trade policy via social media deviates sharply from standard intergovernmental communication protocols. Such an approach undermines diplomatic norms and raises due process concerns for the regulated community, especially given the lack of formal notice-and-comment procedures. -
Speculation on Negotiating Tactics
Some observers suggest this announcement may serve as a negotiating tactic intended to force rapid concessions from the Canadian government. While plausible, this does little to mitigate the uncertainty now surrounding North American trade planning. For supply chain managers, the environment remains akin to “constructing a jigsaw puzzle in a wind tunnel.”
Recommendations
Given the current ambiguity, we recommend the following immediate steps:
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Scenario Modeling
Prepare tariff exposure models for both stacking and substitution scenarios involving the new 35% tariff, sectoral duties, and USMCA exemptions. -
Customs Compliance Review
Re-examine product classifications, rules of origin certifications, and supply chain documentation to ensure readiness in the event of rapid rule changes. -
Engagement with Trade Counsel and Associations
Coordinate with trade counsel and relevant industry associations to advocate for regulatory clarity and provide input should formal rulemaking occur. -
Monitor for Further Guidance
Closely monitor CBP and USTR communications for any subsequent formal guidance, Federal Register notices, or clarification through diplomatic channels.
We are actively monitoring developments and will provide timely updates as more information becomes available.
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