Importing from Canada in 2026: USMCA Rates, Section 122, and What Actually Changes July 24

Most goods imported from Canada to the US qualify for 0% duty under USMCA — and that's been the single most important fact for cross-border trade since tariff chaos broke out in early 2026. Canada is America's second-largest trading partner with $877.2 billion in bilateral trade last year, and USMCA exemption from the 10% Section 122 surcharge has made the agreement more valuable than ever. But exemption isn't automatic, the rules are strict, and several critical deadlines land in the next 60 days.

Quick check: Enter your HTS code in our calculator to see your exact Canada tariff rate, including all surcharge layers.

By VatCheck Research Team. Data: USITC Harmonized Tariff Schedule, USMCA text, CBP trade data, Census Bureau bilateral trade statistics, Federal Register Vol. 91, Presidential Proclamation (Feb 20, 2026).

What the US Actually Imports from Canada

The US imported between $383 billion and $412 billion in goods from Canada in 2025. Energy dominates. It's not even close.

| Category | 2025 Value | Key Products | |---|---|---| | Industrial supplies (energy) | $196.8B | Crude oil, natural gas, refined petroleum | | Vehicles & parts | ~$55B | Passenger cars, auto components, engines | | Machinery & equipment | ~$35B | Turbines, pumps, HVAC systems | | Forest products | ~$28B | Softwood lumber, newsprint, pulp | | Agricultural goods | ~$22B | Canola, beef, dairy, maple products | | Metals | ~$18B | Steel, aluminum, potash |

Crude oil alone accounts for roughly half of all Canadian imports. That matters for tariff math because energy is largely exempt from the surcharges that hit other product categories.

The Tariff Structure: Three Layers for Canadian Goods

Canadian imports pass through up to three separate tariff programs. Which ones apply depends entirely on your product and whether it qualifies under USMCA.

Layer 1: MFN Base Rate (0-25% depending on product)

Every product has a base tariff rate assigned by HTS code. For Canadian goods qualifying under USMCA, this drops to 0% for virtually everything. Without USMCA, you pay the standard MFN rate — which ranges from 0% on crude oil to 25% on certain dairy products.

Layer 2: Section 122 Surcharge (10% or 0%)

Here's where Canada gets a better deal than most countries. The Section 122 surcharge on Canadian goods is 10% — not the 15% that applies to China, Vietnam, South Korea, and most other trading partners. The administration maintained a lower rate for USMCA partners.

But the real advantage: USMCA-qualifying goods are fully exempt from Section 122. This is the exemption that drove USMCA utilization rates from roughly 45% to 89% almost overnight when importers realized they could save 10% on every shipment by properly certifying origin.

Section 122 expires by statute on July 24, 2026. More on what that means below.

Layer 3: Section 232 Tariffs (25-50%)

National security tariffs on metals apply regardless of USMCA status:

• Steel: 50% (restructured April 2026)
• Aluminum: 50%
• Copper and derivatives: 25% (added April 2026)

USMCA cannot override Section 232. This is the biggest pain point for Canadian metals importers — and it triggered Canada's retaliatory tariffs. For the full breakdown, see our Section 232 restructuring guide.

USMCA Compliance: The Math That Saves You 10%

If you're importing from Canada and not using USMCA, you're overpaying. The math is straightforward.

Non-USMCA vs. USMCA: Worked Examples

Example 1: Auto Parts (HTS 8708.29) — $200,000 shipment

| Layer | Without USMCA | With USMCA | |---|---|---| | MFN base rate | 2.5% = $5,000 | 0% = $0 | | Section 122 | 10% = $20,000 | Exempt = $0 | | Total duty | $25,000 (12.5%) | $0 (0%) | | Annual savings (12 shipments) | | $300,000 |

Example 2: Softwood Lumber (HTS 4407.11) — $150,000 shipment

| Layer | Without USMCA | With USMCA | |---|---|---| | MFN base rate | 0% = $0 | 0% = $0 | | Section 122 | 10% = $15,000 | Exempt = $0 | | Total duty | $15,000 (10%) | $0 (0%) |

Even with a 0% MFN rate, USMCA saves you the entire Section 122 surcharge. That's pure margin.

Example 3: Aluminum Sheet (HTS 7606.12) — $100,000 shipment

| Layer | Without USMCA | With USMCA | |---|---|---| | MFN base rate | 3% = $3,000 | 0% = $0 | | Section 122 | Exempt (S.232 product) | Exempt | | Section 232 | 50% = $50,000 | 50% = $50,000 | | Total duty | $53,000 (53%) | $50,000 (50%) |

For metals, USMCA saves you the MFN base rate but can't touch Section 232. The savings are real but modest — 3% on aluminum, up to 5% on some steel classifications.

Calculate your specific product's savings by comparing USMCA vs. non-USMCA rates.

How to Qualify Under USMCA

The rules of origin under USMCA are stricter than the old NAFTA rules. Your product must meet one of these criteria:

Wholly obtained or produced: Goods entirely grown, mined, or manufactured in North America (US, Canada, or Mexico). Agricultural products, crude oil, and minerals typically qualify here.

Tariff shift: Non-originating materials undergo a change in tariff classification (chapter, heading, or subheading level) within North America. This is the primary test for manufactured goods.

Regional Value Content (RVC): The product meets minimum North American content thresholds:

• Transaction value method: RVC = (Transaction value – non-originating materials) / Transaction value >= 75% for most goods
• Net cost method: RVC = (Net cost – non-originating materials) / Net cost >= 75%

For automobiles, the rules are especially demanding. See the automotive section below.

You'll need a USMCA certificate of origin to claim preferential treatment. The certification can come from the importer, exporter, or producer — and blanket certifications cover up to 12 months of shipments.

Automotive Rules: Where USMCA Gets Complicated

Auto trade between Canada and the US is deeply integrated — vehicles cross the border multiple times during production. USMCA raised the bar significantly from NAFTA:

• 75% North American content (up from 62.5% under NAFTA)
• Labor Value Content (LVC): 40% of passenger vehicle value must be produced in facilities paying at least $16/hour
• Steel and aluminum: 70% of steel and aluminum must originate in North America
• Core parts: Engine, transmission, body, axle, suspension, steering, and advanced batteries must individually meet 75% RVC

These rules are among the most complex origin requirements in any trade agreement worldwide. Many auto parts suppliers have restructured supply chains specifically to meet them.

Practical impact: A Canadian auto parts supplier using Chinese steel in their component may fail the steel/aluminum origin requirement even if the part itself is manufactured entirely in Ontario. The USMCA certificate of origin guide walks through the documentation requirements.

Energy Imports: The Largest Category, the Simplest Rules

Crude oil, natural gas, and refined petroleum products make up roughly half of all US imports from Canada. The tariff treatment is favorable:

• Crude oil (HTS 2709): 0% MFN base rate, exempt from Section 122, no Section 232
• Natural gas (HTS 2711.11): 0% MFN, exempt from Section 122
• Refined petroleum (HTS 2710): 0% MFN, largely exempt from Section 122

Energy products were specifically excluded from Section 122 in the original proclamation — one of the 1,655 exempt HTS entries. This means Canadian energy enters the US essentially duty-free regardless of whether the specific shipment has USMCA certification.

For energy importers, USMCA paperwork is still worth maintaining for compliance purposes and in case future surcharges don't include the same energy exemption.

Canada's Retaliatory Tariffs: Why They Matter to Importers

Canada hasn't taken US tariff increases sitting down. The retaliatory measures affect US importers who also export:

• 25% on C$30 billion in US goods (initially imposed, later partially reduced)
• Vehicles: 25% Canadian tariff on US-origin automobiles remains in effect
• Steel and aluminum: 25% on C$15.6 billion in US-origin metals products

If your business both imports from and exports to Canada, the retaliatory tariffs hit both directions. A manufacturer importing Canadian aluminum (50% US tariff) and exporting finished products back to Canada (25% Canadian tariff) faces cumulative duties that can wreck the economics of cross-border production.

This is a significant difference from importing from countries like Vietnam or China, where retaliatory tariffs don't affect US exporters in the same bilateral way.

Canada vs. Mexico: When to Source from Each USMCA Partner

Both Canada and Mexico qualify for USMCA exemption from Section 122. But the advantages differ by product category.

| Factor | Canada | Mexico | |---|---|---| | Section 122 rate (non-USMCA) | 10% | 10% | | USMCA exemption | Yes | Yes | | Section 232 (steel) | 50% | 25% | | Section 232 (aluminum) | 50% | 25% | | Transit time (Midwest US) | 1-2 days | 3-7 days | | Energy imports | Dominant (crude, gas) | Significant (crude) | | Auto parts integration | Deep (Ontario corridor) | Deep (Bajio corridor) | | Labor cost advantage | No | Yes | | Currency advantage | Moderate (CAD ~0.72 USD) | Strong (MXN favorable) |

Canada wins for: energy, forest products, potash, machinery, high-value manufactured goods, and anything where proximity to northern US markets matters. The Ontario-Michigan auto corridor moves $40+ billion in vehicles and parts annually.

Mexico wins for: labor-intensive manufacturing, consumer goods assembly, and products where Section 232 rates matter (Mexico faces 25% vs. Canada's 50% on steel and aluminum). See our Mexico importing guide for the full comparison.

Key difference on metals: Canada faces double the Section 232 rate that Mexico does. For steel and aluminum importers, this 25-percentage-point gap is substantial. A $500,000 steel shipment costs $250,000 in Section 232 duties from Canada vs. $125,000 from Mexico.

July 2026: Two Critical Deadlines

Section 122 Expiration — July 24, 2026

The 150-day statutory limit on Section 122 tariffs means the 10% surcharge on non-USMCA Canadian goods expires July 24. For USMCA-qualifying importers, this changes nothing — you're already exempt. For non-USMCA importers, it's a potential 10% cost reduction.

The question is what replaces it. The Section 301 country-specific tariffs under investigation could impose new rates. Canada was included in the March 2026 overcapacity investigation covering 16 economies — but Canada's expected rate is likely lower than most countries given the USMCA relationship.

USMCA Joint Review — July 2026

The first mandatory joint review of USMCA is scheduled for July 2026, six years after the agreement entered into force. All three countries must confirm they want to continue the agreement, or it begins winding down.

Risk assessment: Termination is extremely unlikely. The economic integration is too deep, and all three governments have signaled continuation. But the review creates a window for renegotiation of specific provisions — particularly:

• Auto rules of origin (some manufacturers want relaxation)
• Digital trade provisions
• Agricultural market access (dairy quotas)
• Labor and environmental enforcement

For importers, the practical risk is low. USMCA will almost certainly be renewed. But any modifications to rules of origin could affect your qualification — worth monitoring if your product is borderline on RVC calculations.

Step-by-Step: How to Import from Canada

1. Classify Your Product

Find your 10-digit HTS code using our HTS search tool. Classification determines your base rate and whether product-specific USMCA rules apply.

2. Determine USMCA Eligibility

Work with your Canadian supplier to verify rules of origin. Request a USMCA certificate of origin — the exporter or producer can certify.

3. Calculate Total Duty

Stack all applicable layers using our calculator. For most USMCA goods: 0%. For metals: 25-50%. For non-USMCA goods: 10% Section 122 + MFN base rate. See our tariff calculation guide for the methodology.

4. Secure a Customs Bond

Required for commercial imports over $2,500. A continuous bond covers a full year of shipments — our customs bond guide explains the process and costs.

5. Arrange Transportation

Canada-US logistics are fast. Truck freight from Ontario to Michigan takes hours. Rail from Alberta to the Gulf Coast takes days. Your Incoterms agreement determines who arranges and pays for transport.

6. Clear Customs

Your broker files entry with CBP. USMCA preference is claimed on the entry summary with the certificate of origin on file. CBP can request verification for up to 5 years after importation.

7. Retain Records (5-6 Years)

CBP audit activity is rising. Keep all origin documentation, certificates, commercial invoices, and supplier declarations for at least 5 years — 6 is safer. USMCA origin verifications have become more common as utilization rates climbed.

8. Check Refund Eligibility

If you paid IEEPA tariffs on Canadian imports during April 2025, check whether you qualify for a refund through the CAPE portal.

Common Mistakes That Cost Importers Money

Not claiming USMCA on qualifying goods. Before the tariff surge, plenty of importers skipped USMCA paperwork because the savings were marginal (often just a few percentage points on MFN rates). Now that USMCA exempts you from 10% Section 122, the cost of skipping certification is real. If you missed it on past entries, file Post-Summary Corrections within 300 days.

Assuming USMCA covers metals. It doesn't override Section 232. I've seen importers budget 0% for Canadian aluminum and then get hit with a $250,000 duty bill.

Using outdated certificates. USMCA blanket certifications cover up to 12 months. If your supplier's certificate expired, your entry loses preferential treatment. Set calendar reminders.

Ignoring duty drawback. If you import Canadian materials, manufacture in the US, and re-export — you can recover up to 99% of duties paid. With Section 232 rates at 50%, drawback claims on Canadian metals are worth significant money.

Frequently Asked Questions

Are Canadian imports duty-free under USMCA?

For most goods, yes. USMCA-qualifying products enter at 0% total duty — no MFN base rate, no Section 122 surcharge. The major exception is metals: steel and aluminum face 50% Section 232 tariffs and copper faces 25%, regardless of USMCA status. Check your HTS code for the exact rate.

What's the Section 122 rate on Canadian goods?

It's 10% for non-USMCA Canadian goods — lower than the 15% rate applied to most other countries. USMCA-qualifying goods are fully exempt. Section 122 expires July 24, 2026, so this surcharge has a limited remaining lifespan. See our Section 122 expiration analysis.

How do I get a USMCA certificate of origin for Canadian goods?

The exporter, producer, or importer can certify origin. There's no required government form — it's a self-certification with 9 mandatory data elements. Blanket certifications cover up to 12 months of shipments for the same product. Your Canadian supplier should be able to provide this; if they can't, that's a red flag about whether the goods actually qualify.

Does Canada face Section 301 tariffs?

No. Section 301 tariffs currently target only China. However, Canada was included in the March 2026 Section 301 overcapacity investigation covering 16 economies. If that investigation results in new tariffs, Canada could face Section 301 duties — but rates would likely be modest given the USMCA framework. This is worth monitoring through the July 2026 determination window.

What happens to Canadian import costs after July 24, 2026?

For USMCA importers: nothing changes — you're already at 0% on non-metal goods. For non-USMCA importers: the 10% Section 122 surcharge drops off unless replaced by Section 301 country-specific tariffs. For metals importers: Section 232 rates (50% steel/aluminum, 25% copper) continue indefinitely — they have no expiration date. Use our Canada tariff page for the latest rates.

Is it cheaper to import from Canada or Mexico?

For most non-metal goods under USMCA, the total duty rate is identical: 0%. The difference comes down to product cost, freight, and Section 232 rates on metals. Mexico has a significant advantage on steel and aluminum (25% vs. Canada's 50%). Canada has the edge on energy, lumber, and goods destined for the northern US due to shorter transit times. For a side-by-side, see our Mexico importing guide.

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Last updated: May 22, 2026. The USMCA joint review is scheduled for July 2026, and Section 122 expires July 24. For current rates on any HTS code from Canada, use our calculator. This is not legal or tax advice — consult a licensed customs broker or trade counsel for your specific situation.