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The Government of Canada has responded to U.S. tariffs by imposing surtaxes on imports originating in the United States. These surtaxes are being imposed in a prescriptive manner, targeting specific products and industries, and doing so through a phased approach. The impact, however, is no less significant on Canadian importers. This quiz will help you test your knowledge on Canada’s retaliatory measures and offers information often overlooked. Put your knowledge to the test and learn along the way.
The (Q2) 2025 Canada Tariff Quiz
trade disruption
Canada’s surtax is being imposed on $155 billion in U.S. goods. The first phase is made up of $30 billion in U.S. goods and began on March 4, 2025. A second phase on the remaining $125 billion in goods will take effect at a later date.
Next question
The correct answer is B.
Nope!
Correct!
False
B
True
A
True or False: Canada imposed in response to U.S. tariffs can be neutralized by qualifying the imported goods under the United States-Canada-Mexico (USMCA).
Question 1 of 8
Unlike U.S. tariffs on Canada-origin goods, Canada’s retaliatory surtaxes do not offer relief to importers should their imports qualify for the USMCA. However, in the case of finished automobile imports, importers can be exempted on the non-U.S. content of USMCA-qualifying vehicles.
Applied to a targeted list using a phased approach
D
Universally applied through a phased approach
C
Applied all at once on a targeted list of goods
Universally applied all at once to all U.S. imports
On March 4, Canada imposed a surtax of 25% on U.S.-origin imports in response to U.S. universal tariffs. Canada’s surtaxes are:
Question 1 of 10
The correct answer is D.
The President has three mechanisms he can use to impose tariffs against Canada and Mexico without any Congressional approval required. Section 301 of the Trade Act of 1974 allows the president to impose tariffs against countries he believes is engaging in harmful or unfair trade practices that work against the economic interests of the United States. Section 232 of the Trade Expansion Act gives the president authority to impose tariffs on the grounds of national security. The International Economic Emergency Powers Act empowers (IEEPA) the president to manage imports in the event of a national emergency. Given that neither Canada nor Mexico are engaging in unfair trade practices and that the tariffs are anticipated to be applied broadly, it’s unlikely the tariffs will be imposed through Section 301 or Section 232. A more plausible scenario would be using the IEEPA to declare a national emergency in the form of a border crisis. Once the executive order is made, the application of tariffs will be a matter of days, rather than weeks or months.
True or False: The implementation of tariffs would require Congressional approval and with some Republican lawmakers reticent about putting tariffs against America’s largest trading partners, it will likely be months before any tariffs are imposed, if ever?
Pay duties to CBP at the time goods reach the border.
Pay duties after the goods have been received by the U.S. importer.
True or False: Businesses involved in international trade should check the global directory of restricted parties on quarterly basis to ensure they aren’t directly or indirectly transacting with a restricted party?
Question 3 of 4
There is no global directory of restricted parties. Each country maintains its own list of restricted parties and lists can change on a weekly basis, making it prohibitively difficult for businesses to manually monitor restricted parties.
None of the above
Threatening to respond but only after careful consideration
Doubling the list of U.S. products on which surtaxes are imposed
Doubling the rate of previously imposed retaliatory surtaxes
Canada’s government responded to Washington’s recent increase in the tariff rate on steel and aluminum by:
Question 2 of 8
At time of writing, the government of Canada has yet to retaliate but has stated that it will carefully consider its options and respond when it’s ready to do so.
The correct answer is C.
In response to newly imposed tariffs by the U.S. on Canadian steel and aluminum.
An unprovoked act to compel the U.S. to remove its new tariffs.
The second phase of the tariffs imposed on March 4th.
True or False: U.S. goods targeted with surtaxes that are imported into Canada through a Canadian foreign trade zone are exempted from surtaxes.
Question 3 of 8
When U.S. tariffs are imposed, Canadian and Mexican businesses exporting to the U.S. are required to:
Question 2 of 10
Canadian and Mexican exporters will not be required to pay the customs duties associated with the new U.S. tariffs. These will be paid by the U.S. importers purchasing the goods from Canadian and Mexican exporters. However, the added cost of the tariffs will reduce the price competitiveness of Canadian and Mexican imports, potentially resulting in a loss of business for those exporters.
Goods originating in the U.S. that are targeted by Canada’s retaliatory surtaxes are subject to the surtax as soon as they enter the commerce of Canada, irrespective of their shipping origin or location of manufacturing. However, use of FTZs can help companies with integrated supply chains across North America defer duty outlay, improving short-term cash flow.
On March 13, 2025, Canada imposed a surtax on an additional $29.8 billion in U.S. goods. This was done as:
Question 3 of 10
The new surtax was imposed in kind based on the value of U.S. steel and aluminum exports from Canada to the U.S. The list of impacted goods may be expanded to match the value of Canadian steel and aluminum derivatives, which are also impacted by the U.S. action.
None of the above.
Calculate the value of their exports before shipment and pay the associated duties to U.S. Customs and Border Protection (CBP) before they reach the border.
Canada’s surtax remission program allows for importers of which goods to file for remission:
Question 4 of 8
The correct answer is A.
The surtax remission issued by Canada on April 17, 2025, outlined that key industries involved in health care, national defence and policing and manufacturing/processing and food labelling would have the opportunity to seek remission from surtaxes. Additional information can be found here.
There is no surtax remission program
Energy resources, manufacturing, steel and aluminum, steel and aluminum derivatives
Agriculture, food products, farm equipment and energy resources
Health care, pharma, food labelling, manufacturing, processing and products in support of national security/policing
True or False: The Canada-U.S. trade conflict has yet to really impact how businesses on both sides of the border operate.
Question 5 of 8
U.S. tariffs and Canada’s retaliatory surtaxes have had a chilling effect on trade with Canadian exports to the U.S. down 10.8% in April, the lowest level since June 2023. The drop in exports was driven primarily by declining exports in automobiles and auto parts, which declined 17.4%, and consumer-goods exports, which fell 15.4%.
25% surtax on all auto parts, irrespective of whether they have non-U.S. content.
25% on all content of automobiles that don’t qualify for the USMCA but 25% for only the U.S. content of automobiles that do qualify for USMCA.
25% surtax on all content of automobiles, irrespective of whether they qualify for duty exemption under the USMCA.
The surtax on U.S.-originating automobiles and auto parts imported into Canada is:
Question 6 of 8
The Canadian government chose not to impose a surtax on auto parts in response to U.S. tariffs on automobiles and auto parts originating in Canada as doing so would be unduly detrimental to the Canadian economy. Finished automobiles are subject to the surtax but USMCA qualifying autos can receive exemption for Canadian and Mexican auto content.
Valuing the goods below what they’re actually worth in customs documentation.
Applying to have their products exempted from the tariffs.
Using a different classification code when compiling customs documentation.
U.S. importers can mitigate the impact of tariffs by:
Question 5 of 10
The imposition of tariffs will likely create a higher level of vigilance amongst customs officers. Improperly classifying or valuing goods can result in subsequent fines and penalties and could result in goods being held at the border until more accurate documentation is in received by customs authorities. Exemptions are a possible, but not guaranteed, form of recourse for U.S. importers that will ultimately depend on what legal mechanism the president uses to impose the tariffs.
True or False: Importers who have paid higher-than-necessary duties due to incorrect valuation or classification of goods will not have recourse in the case of the surtax.
Question 7 of 8
Importers will have the opportunity to request refund of duties related to surtax as they would with any other duties.
True or False: Since the tariffs are being imposed by Washington against Canadian and Mexican imports, it is only Canadian and Mexican exporters that are impacted; the countries’ importers won’t be impacted by a trade war?
Question 4 of 10
Tariffs imposed by Washington will almost certainly be met with reciprocal tariffs on U.S. goods by Canada and Mexico. While these tariffs may not be applied universally, they will impact Canadian and Mexican importers of the products on which tariffs are applied.
Do nothing because the bond need only cover the duty outlay associated with the value of the imported product, not the outlay associated with the tariffs.
Pay interest on the amounts exceeding the value of the bond upon entry into the country.
Get a more substantial customs bond to account for the increased duty outlay.
Customs bonds are required by customs agencies to insure the duty outlay for goods moving into a country. In the event tariffs regularly push duty outlays beyond the value of a customs bond, importers would have to:
Question 8 of 8
Customs bonds must account for the total value of duty outlay, which is based on the percentage tariff placed against those imports. While the Canada Border Services Agency is currently offering a grace period on customs bond requirements until April 19, after that date Insufficient surety could result in goods being held at the border until duties are paid. Importers whose bonds are of insufficient value to insure the additional duty outlay associated with tariffs will require a more substantial bond.
Transship product through countries with lower tariff barriers (e.g., move Mexican goods into the U.S. via Nicaragua or Guatemala).
Arrange with customs authorities to make payments in installments.
Shift production through free trade zones (FTZs) to avoid paying import duties until time of export.
Delay paying duties and taxes to customs authorities for 90 days.
To improve cashflow when tariffs are applied to imports, businesses can:
Question 6 of 10
Delays in paying customs duties will result in interest charges and customs authorities do not allow for payment in installments. Transshipment is a possibly strategy but would require substantial transformation of the product within the jurisdiction through which the goods are being transported in order for them to qualify as being originating from that jurisdiction. Free Trade Zones on the other hand allow importers to bring product in from other countries into tariff-free manufacturing hubs in the U.S., Canada or Mexico, manufacture those goods (either in whole or in part) and then export them to the next destination. Duties aren’t applied to the goods until they enter the formal commerce of the country. This allows companies to retain capital for investment or other purposes while goods are being produced. There are over 230 FTZs in the U.S., 16 in Canada and 13 in Mexico.
End Quiz
True or False: Importers who have paid higher-than-necessary duties due to incorrect valuation or classification of goods will not have recourse in the case of the surtax?
Question 9 of 10
True or False: Given that trade between the U.S., Canada and Mexico is governed by the United States-Mexico-Canada Agreement (USMCA), a free trade agreement, tariffs will only apply to those goods that are not included in the trade agreement. Goods that are included within the agreement will continue to be traded with duty-free status.
Almost all goods traded between the three countries are governed by the USMCA, but the tariffs imposed through executive order will override the USMCA and require duties to be paid for all tariffed goods.
The Canada Border Services Agency in concert with government officials.
Government officials with industry consultation.
Government officials without industry consultation.
Industry representatives at the request of the Canadian government.
The products in the second phase of Canada’s retaliation against U.S. tariffs is being compiled by:
Question 10 of 10
The government of Canada has been engaging members of industry to identify instances in which the surtax may have an undue adverse impact on certain industries, or that would have an outsized negative impact on the country’s economic performance.
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