Canada Non-USMCA Goods: IEEPA 35% Surcharge Replaced by Section 122 at 10%

On February 20, 2026, the Supreme Court struck down the IEEPA 35% fentanyl surcharge that had applied to non-USMCA Canadian goods. Effective February 24, 2026 (per CBP CSMS #67844987), Section 122 at 10% replaces that prior 35% combined rate. USMCA-qualifying goods from Canada remain at 0%.

US importers sourcing goods from Canada that don't meet USMCA rules of origin requirements. This includes goods with insufficient North American content and transshipped goods from third countries through Canada. Canadian manufacturers whose products don't meet USMCA thresholds face a significant competitive disadvantage versus USMCA-qualifying Canadian goods.

Canada Non-USMCA Goods: IEEPA 35% Surcharge Replaced by Section 122 at 10% (effective 2026-02-24). On February 20, 2026, the Supreme Court struck down the IEEPA 35% fentanyl surcharge that had applied to non-USMCA Canadian goods. The country-specific rates widely reported as bilateral trade deals were the primary mechanism for differentiated tariff treatment during the pre-February 2026 period. They were not a separate instrument. They were country lines inside the reciprocal tariff imposed by Executive Order 14257, enumerated in HTSUS Chapter 99 alongside the universal reciprocal baseline. Executive Order 14389, "Ending Certain Tariff Actions" (91 FR 9437), provided on February 20, 2026 that the additional duties imposed under IEEPA in Executive Order 14257, as amended, are no longer in effect and are no longer to be collected — so those rates ended rather than becoming legally uncertain, and CBP has published a refund worksheet for duties collected under the terminated headings (91 FR 42207). The Section 122 proclamation four days later set a single uniform rate rather than differential country rates, and Section 122 itself lapsed to 0% on July 24, 2026. India and Vietnam, which had carried the highest of those country rates, therefore pay MFN plus the forced-labor Section 301 duty today — 10% and 12.5% respectively — the same structure as every other covered economy. USMCA partners Canada and Mexico remain the most significant exception: USMCA-qualifying goods enter the US at 0%, bypassing every layer except Section 338. The trade policy trend still favors USMCA-qualifying supply chains, but the gap to other origins narrowed sharply when the reciprocal country rates were terminated.

Importers who paid one of the terminated reciprocal country rates should ask their customs broker about refund eligibility rather than about current rates: those duties stopped being collected on February 20, 2026 and CBP has published a refund worksheet (91 FR 42207). One trap to check for is that the HTSUS still prints the terminated headings, because the implementing Federal Register notice required to amend the schedule has not issued — a heading in Chapter 99 is not evidence a duty is live. The most reliable tariff reduction strategy remains USMCA qualification for Canadian and Mexican-origin goods, which provides statutory 0% rates. For countries without bilateral deals — such as Australia, New Zealand, and most of Africa — Section 122 itself lapsed to 0% on July 24, 2026, so the operative rate today is the forced-labor Section 301 duty (10% or 12.5%, if the country is on the roughly 60-economy covered list) or 0% otherwise, unless a Section 232 exemption governs instead.

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