Canada Non-USMCA Rate Revised from 35% to 10%

Two Canadas at the border

For tariff purposes there are effectively two Canadas. Goods that qualify under the United States-Mexico-Canada Agreement rules of origin enter the United States at zero percent, exactly as they did before the 2026 upheaval. Goods that do not qualify — because they contain too little North American content, or were transformed elsewhere and only passed through Canada — fall to a separate fallback rate. That fallback is the number this update corrects: it is 10%, not the 35% that lingered in our earlier data and in several public trackers. The gap between the two paths is the single largest lever a Canadian-sourcing importer controls, and getting the fallback figure right is what makes the comparison honest.

Where the 35% came from, and why it is gone

The 35% was real, but it belonged to a legal regime that no longer exists. Through 2025, non-USMCA Canadian goods carried a 35% surcharge imposed under the International Emergency Economic Powers Act and justified on fentanyl-trafficking grounds. That authority collapsed on February 20, 2026, when the Supreme Court ruled that IEEPA does not grant the President power to impose tariffs — a power the Constitution reserves to Congress. With the fentanyl surcharge invalidated, the administration did not leave non-USMCA Canadian goods untaxed; effective February 24, 2026, the standard 10% Section 122 global surcharge took its place, a transition that US Customs and Border Protection documented in cargo systems message CBP CSMS #67844987. The headline non-USMCA rate therefore fell from 35% to 10% in the span of four days, and our data should have moved with it.

The re-verification that caught the lag

It did not move immediately. The same April 19, 2026 re-verification cycle that corrected the Vietnam figure also compared our Canada non-USMCA entry against an independent reference — the Tax Foundation Tariff Tracker — and flagged that we were still publishing the retired 35% figure. The correction to 10% was applied on May 8, 2026 in commit dd02f3b. As with the Vietnam revision, we are stating the change openly: a stale 35% does not merely overstate duty, it can scare an importer away from a Canadian supplier whose goods would actually clear at 10% or, if they qualify under USMCA, at nothing at all.

How to tell which Canada you are importing from

Qualification is not a matter of where a shipment was loaded; it is a matter of origin under the agreement's rules. Most product categories must meet a regional value content threshold, and the automotive sector layers additional requirements on top, including a 75% North American content test for passenger vehicles and labor-value rules for the parts that go into them. A product assembled in Canada from largely Asian components may fail those tests and land in the non-USMCA bucket at 10%, while a product with deep North American sourcing clears at zero. The decision is documented through a certification of origin rather than a customs officer's judgment at the dock, so the burden sits with the importer to know, before the shipment moves, which bucket the goods fall into. The USMCA explainer walks through the rules-of-origin logic in more detail.

What the revision means in dollars

On a $100,000 FOB shipment, the distance between the retired 35% figure and the current 10% rate is roughly $25,000 — a 25-percentage-point gap that dwarfs the two-point Vietnam revision and is large enough to flip a sourcing decision on its own. An importer who shelved a Canadian supplier last year on the assumption of a 35% bill may find the real cost is now a quarter of that, and the gap between non-USMCA 10% and USMCA-qualifying 0% is a further reason to invest in the origin paperwork rather than treat it as a formality. None of this changes the rate for goods already cleared; it changes the model you should be using for goods still in the pipeline. To see the corrected fallback rate flow through a full calculation, begin at the Canada country overview and run your product and value through the tariff calculator, which applies the USMCA-qualifying and non-USMCA paths separately so the two Canadas stay distinct.

Why the IEEPA collapse reached past Canada

The February 20, 2026 ruling did more than retire one surcharge. By holding that the emergency-powers statute could not be used to impose tariffs at all, the Court removed the legal footing for a whole layer of country-specific rates that had been built on that authority through 2025. The administration's response was to rebuild as much of the structure as possible under different statutes, most prominently the Section 122 balance-of-payments surcharge that now carries the non-USMCA Canada rate. For Canada specifically the effect was a clean swap: the 35% fentanyl surcharge disappeared and a 10% surcharge from a different authority took its place four days later. But a swap is only as durable as the statute underneath it, and Section 122 is explicitly temporary, which is exactly why the 10% figure should be read as the current rate rather than a settled one.

Canada, Mexico, and the nearshoring case

The correction also sharpens the comparison that drives a great deal of North American sourcing strategy. Both Canada and Mexico sit inside the USMCA, and for goods that qualify, both deliver a zero rate that no bilateral deal elsewhere can match. The non-USMCA fallback now being 10% rather than 35% does not change that qualifying rate, but it does change the penalty for falling short of it. A firm weighing whether to invest in the documentation and content requirements needed to qualify a Canadian product is now choosing between zero and 10%, not between zero and 35%. That is a narrower gap, but for high-volume importers the duty saved on qualifying goods still compounds quickly, and the agreement remains the most reliable route to a zero rate available anywhere in the current system. The same logic applies to Mexican sourcing, which is one reason nearshoring into USMCA-qualifying production has held its appeal even as headline rates have moved.

The layers that sit outside this number

One caution belongs alongside the corrected figure: the 10% non-USMCA rate is the Section 122 surcharge, and it is not the only thing a Canadian shipment may owe. Steel and aluminum carry Section 232 national-security tariffs that apply independently of USMCA status and of Section 122, so a non-USMCA Canadian steel product is not simply a 10% item. Copper, automobiles, lumber, and semiconductors each sit under their own Section 232 treatment as well. The rate corrected here is the general fallback for goods whose only applicable surcharge is Section 122; importers of metals and the other Section 232-covered categories should treat this figure as one layer in a stack rather than the entire bill, and run the specific product through the calculator to see the combined result rather than reasoning from the headline number alone.