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 carried the non-USMCA Canada rate from February 2026. 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 was explicitly temporary — which is exactly how it played out. The surcharge reached its 150-day statutory limit and lapsed to zero on July 24, 2026, so the 10% figure this article corrected was never a settled rate and is no longer the operative one. Canada's non-USMCA position today is set by the layers described below, not by Section 122.

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 on every tariff layer except one: Section 338, which from August 22, 2026 applies to Canada only, at 50%, and is not waived by a USMCA preference claim. A qualifying Canadian good that falls inside the Section 338 annex keeps its 0% preferential underlying duty and still pays the 50% on top. For Mexican origin, and for Canadian goods outside that annex, the qualifying zero rate is as complete as this paragraph originally described. 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 outside the Section 338 annex the agreement remains the most reliable route to a zero rate available anywhere in the current system. The same logic applies to Mexican sourcing — where Section 338 does not reach at all — 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 was the Section 122 surcharge, and it was never the only thing a Canadian shipment may owe. Two other layers sit outside it, and one of them arrived after this article was first published.

The first is Section 232. Steel and aluminum carry national-security tariffs that apply independently of USMCA status and of Section 122, so a non-USMCA Canadian steel product was never simply a 10% item. Copper, automobiles, lumber, and semiconductors each sit under their own Section 232 treatment as well.

The second is Section 338, which took effect on August 22, 2026 and is the more consequential of the two for anyone relying on a USMCA claim. It applies to Canada only, at 50%, and it is additive to everything — to the MFN rate and to any Chapter 99 duty already in play. Until September 15, 2026 it reached neither goods already subject to Section 232 nor motor vehicles and their parts. Proclamations 11064 and 11065 changed both on that date: the alcohol duty (HTSUS 9903.03.13) and the motor-vehicle-grievance duty (9903.03.14) now apply on top of any Section 232 duty, and vehicles under 8703.10.50 and 8703.21.01 carry the duty. Only the dairy duty still stops short of Section 232 goods. What makes it different from every other layer named on this page is that a USMCA preference claim does not defeat it: a qualifying Canadian good inside the annex keeps its 0% preferential underlying duty and still pays the 50%. Every other item in this list disappears for a qualifying good; this one does not.

A note on scope, because precision matters more than the appearance of it. The Section 338 annexes cover a broad basket of Canadian goods spread thinly across roughly 60 HTS chapters at individual 8-digit lines, and those lines do not align with this site's whole-chapter product categories. This site therefore prices Section 338 for wine and spirits (HTS 2203–2208), where the annex maps cleanly, and does not claim per-category precision beyond that. From September 29, 2026 those annexed alcohol goods cannot be imported at all, so for entries on or after that date the question stops being what they cost. Dairy is in scope under the proclamation but is not a product category here. If a Canadian product matters to your costing, check the specific 8-digit line rather than reasoning from category level.

The rate corrected here is the general fallback for goods whose only applicable surcharge was Section 122; importers of metals, of the other Section 232-covered categories, and of anything that may fall inside the Section 338 annex 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.