With tariffs coming into effect, Canadian aftermarket business owners, and those connected to U.S. businesses selling into Canada need to stay informed on several key aspects to effectively navigate this new landscape.

While U.S. imposed tariffs are sweeping—essentially 25% on all imports from Canada, except certain energy imports that are pegged at 10%–retaliatory tariffs imposed by Canada are much more targeted.

Under United States Surtax Order (2025-1) enacted by the Government of Canada March 4, 2025 as a response to the U.S. action, a 25% tariff applies to a specific list of products. There are many inclusions and exclusions, including parts destined for OEM production of vehicles and some machinery.

The Government of Canada published a list of targeted products prior to the 30-day pause in tariffs, making up some $30B  CDN in imports. This list can be reviewed HERE.

These tariffs only apply to goods originating from the U.S., which “shall be considered as those goods eligible to be marked as a good of the U.S. in accordance with the Determination of Country of Origin for the Purposes of Marking Goods (CUSMA Countries) Regulations.”

This list does not appear to target auto parts by and large. It does however include tires of many types—both on and off road as well as recreational—some hand tools, items such as vehicle seat covers that fall into the general category of “other furnishing articles.”

Readers are advised to check with their logistics and brokerage experts for specific insights on their product areas of concern.

In addition, a larger tranche of products worth $125 billion has also been drawn up. This list is not broadly available at this time, but will include products such as passenger vehicles, trucks and buses, steel and aluminum products, certain fruits and vegetables, aerospace products, beef, pork, dairy products, and more.

There are also U.S. tariffs coming on steel and aluminum, and a number of other tariff measures threated by the Trump Administration in the U.S. over the coming weeks.

It should be noted that virtually every industry association and group inside and outside of the automotive aftermarket has come out against the tariff strategy initiated by the Trump Administration.

Governemtns in Canada are also working on non-tariff measures, and supports that may be necessary for thos most affected by the U.S. intiated actions.

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Regardless, here’s a breakdown of the essential points that are worth consideration:

1. Understanding the Tariff Impact

• Increased Costs: Tariffs can increase the cost of imported goods, which may affect your business if you rely on foreign products or raw materials. Business owners should assess how much their costs might rise and adjust their pricing strategies accordingly.
• Supply Chain Disruptions: If you import goods or materials from other countries, tariffs could lead to delays or shortages. It’s essential to evaluate your supply chain and consider alternatives, such as finding new suppliers or exploring local sources.
• Brokerage/Customs impacts: Depending on your import/export arrangements, the imposition of tariffs may require changes to importers of record Importer bonds. Tariffs of the magnitude being imposed will quickly impact importer bond requirements making existing bonds insufficient. Bond liability could stack. More and more financial collateral (i.e. cash, LCs or other instruments) will be required from the importer by surety to issue and secure new bonds. Make your finance department aware. Timeframes can be tight to get new bonds in place, which in turn, can be a shock to a company’s financial policy and planning.
• Know what ‘in-transit” means: While too late likely for this round, it is important to note that “Canada’s countermeasures do not apply to U.S. goods that are in transit to Canada on the day on which they come into force.” Seek professional interpretation of what this means, but could include loaded trailers “pushed back” and ready to be transported to the border, although they may still be far from the border.

3. Reevaluate Pricing and Business Strategy

• Adjust Pricing: Depending on how tariffs affect your costs, you may need to adjust product prices to maintain profit margins. Be mindful of customer sensitivity to price increases.
• Diversify Markets: Explore new markets outside of countries affected by the tariffs to minimize the impact on your business. Exporting to countries that are not impacted by the tariff could offer a way to balance the negative impact on your local sales.

4. Customs and Import Regulations

• Customs Procedures: Tariffs usually come with updated import/export regulations. Make sure your business complies with the latest customs procedures to avoid delays and penalties.
• Duty Drawback Programs: In some cases, Canadian businesses can apply for duty drawbacks on tariffs paid if the goods are re-exported. Investigate whether your business qualifies for such programs.

5. Adjust to Shifting Demand

• Consumer Behavior: If the tariffs cause price hikes, customers may seek cheaper alternatives. Anticipate shifts in demand and adjust marketing or inventory management strategies to accommodate changing consumer preferences.
• Focus on Innovation: Tariffs can sometimes push businesses to innovate, find cost-effective production methods, or explore new products that could help maintain competitiveness.

6. Financial Planning and Risk Mitigation

• Assess Financial Impact: Carefully calculate the potential impact of tariffs on your bottom line and make adjustments to your financial planning. Tariffs may increase operating costs, so ensure you have a financial cushion to cover these potential increases.
• Hedging Against Currency Risk: If you’re importing from countries with currency volatility, consider hedging strategies to minimize the risk of exchange rate fluctuations affecting your costs.

7. Legal and Policy Updates

• Stay Updated: Tariffs are subject to change, so it’s important to monitor any legal or policy shifts. Consult trade lawyers or industry experts to stay on top of changes.
• Engage with Government Resources: Take advantage of resources from organizations like Global Affairs Canada and the Canada Border Services Agency to understand how the tariffs will be implemented and what support is available to Canadian businesses.

8. Collaborate with Industry Associations

Industry associations often lobby on behalf of businesses and keep you informed about tariff changes and can offer resources or strategies to help businesses cope with tariffs.

Various sources were used in the creation of this article and presented here for informational purposes only. Readers are advised to connect with subject experts before executing a business tactic or strategy to mitigate tariff impacts.