If you’re trying to figure out the current tariff on Canada, I’ll be honest: it’s a bit of a moving target. We aren't in the "business as usual" era of the USMCA anymore. Since the second Trump administration took the reins in 2025, the trade border between the U.S. and Canada has started to look more like a fortress and less like a bridge.
Basically, the old "zero tariff" world of North American trade is currently on life support.
As of January 2026, the situation is a messy cocktail of baseline duties, sector-specific surtaxes, and a looming Supreme Court decision in the U.S. that could flip everything on its head by next week. It's kinda chaotic. If you're a business owner or just someone wondering why a new GMC truck or a bundle of 2x4s costs a fortune, here is the breakdown of what's actually happening on the ground.
The Baseline: Where the Tariffs Stand Today
Right now, the United States is applying a tiered tariff system on Canadian goods that bypasses the traditional USMCA (or CUSMA, if you're in Ottawa) exemptions.
The "Fentanyl" and Reciprocal Tariffs
Following executive orders from 2025, the U.S. has implemented a baseline tariff structure. While over 85% of trade remains nominally "tariff-free" because of USMCA compliance, anything that falls outside those strict rules—or is caught in the crossfire of the "America First" trade policy—is getting hit hard.
- Energy and Potash: These are currently taxed at 10%. This was a strategic choice; taxing Canadian oil at 25% would have sent U.S. gas prices into the stratosphere, so the administration kept it "low" but didn't exempt it.
- Most Other Goods: For non-USMCA-qualifying products, the rate sits at 25%.
- The October Threat: You might've seen the news back in late 2025 where President Trump threatened to hike the Canada "fentanyl tariff" by another 10%. That hasn't been fully codified into the Harmonized Tariff Schedule (HTS) yet, but the threat is keeping the markets on edge.
The "Big Three" Hits: Steel, Aluminum, and Lumber
If you work in construction or manufacturing, the baseline rates aren't your biggest problem. It's the Section 232 duties.
Steel and Aluminum
This is where it gets ugly. In 2025, the U.S. doubled down on Section 232 national security tariffs. Canadian steel and aluminum, which used to be exempt, are now facing 50% tariffs.
Wait, 50%? Yeah. It went from 0% to 25% in March 2025, and then jumped again in July. Canadian mills like Stelco and Algoma have been getting hammered, and the latest data from early January 2026 shows that Canadian steel exports to the U.S. have dropped by nearly 44% year-over-year.
Softwood Lumber
The "Lumber Wars" are an old story, but they’ve got a new, sharper edge. The U.S. currently imposes a 10% tariff on all imports of softwood timber and lumber. This is in addition to any existing anti-dumping or countervailing duties that were already in place. If you're building a house, this is why your framing costs have stayed stubbornly high despite the housing market cooling off.
The "Carney Pivot": Canada’s Response and the China Deal
Here’s the part most people are missing. Canada isn't just sitting there taking it. After Prime Minister Mark Carney took over, the strategy shifted from "please like us" to "we need new friends."
Just yesterday, January 16, 2026, Canada dropped a bombshell. They reached a deal with China to cut tariffs on Chinese electric vehicles (EVs) to 6.1% for the first 49,000 units.
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Why does this matter for the current tariff on Canada? Because the U.S. views this as a "backdoor" for Chinese tech. U.S. Trade Representative Jamieson Greer has already called the move "problematic." This deal is almost certainly going to lead to more U.S. tariffs on Canadian-made autos in the coming months as retaliation.
Canada’s Retaliatory Surtaxes
Canada has its own "wall" now. As of December 26, 2025, Canada implemented a 25% surtax on "steel-derivative" products globally. They’ve also threatened a 25% surtax on $30 billion worth of U.S. goods if the Section 232 tariffs aren't walked back during the July 2026 USMCA review.
The Supreme Court Wildcard
Honestly, everything I just wrote could be irrelevant by the time you finish your coffee.
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The U.S. Supreme Court is currently deciding the fate of these tariffs. Small businesses and 12 states (including New York and Oregon) sued, arguing the President overstepped his authority under the International Emergency Economic Powers Act (IEEPA).
If the Court rules against the administration—which could happen any day this week—the U.S. might be forced to refund billions in collected tariffs. President Trump posted on social media that it would be a "complete mess" and basically impossible to pay back. If the tariffs are struck down, the current tariff on Canada would effectively revert to the original USMCA rates (mostly 0%) almost overnight.
What This Means for You (Actionable Insights)
If you're trying to navigate this mess, "wait and see" isn't a strategy. It's a risk.
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- Check Your HS Codes: Don't assume your product is exempt because it's "made in Canada." If the raw materials (like the steel in the components) are subject to the 50% surtax, your finished good might be too. Use the Harmonized System Update (HSU) 2543 to verify your specific codes.
- Watch the July Review: July 1, 2026, is the formal joint review of the USMCA. This is the "kill switch" date. If the three countries can't agree on rules of origin (especially regarding Chinese components), the whole agreement could expire by 2036, leading to permanent, even higher tariffs.
- Source Diversification: If you’re a Canadian exporter, look at the "Carney Pivot." The government is aggressively pushing for trade with the EU and Asia to reduce the 75% reliance on the U.S. market.
- Prepare for Electronic Refunds: If the Supreme Court strikes down the tariffs, U.S. Customs (CBP) has announced that all refunds will be issued via Automated Clearing House (ACH) starting February 6, 2026. Make sure your business is set up for electronic transfers now.
The "borderless" North American economy is gone for now. Whether it comes back depends on a group of judges in D.C. and a very tense meeting scheduled for this July. Stay sharp.
Next Steps for Your Business:
- Audit your supply chain for "Section 232" exposure.
- Register with the CBP's Automated Clearing House to ensure you can receive potential court-ordered refunds.
- Monitor the USMCA Review Commission announcements starting in March 2026.