What are tariffs?

A tariff is a tax on goods imported from one country to another. Tariffs can be applied broadly or to specific categories or types of items. Typically, tariffs are a set percentage of the total item value. Tariffs are paid by the person or company that imports goods. Americans,  not Canadians,  would pay tariffs on Canadian goods imported into the U.S. 

Current tariffs affecting Canadian exports into the U.S.:

• 35% tariff on all exports that don’t comply with the Canada-United States-Mexico Agreement (CUSMA) (effective April 2). 
• Goods transshipped to evade the 35% tariff will be penalized with a 40% tariff. For example, if a business tries to avoid the 35% tariff by shipping goods through another country first, the U.S. will penalize that action with an even higher tariff of 40%.
• 10% tariff on non-CUSMA compliant potash and energy products (effective April 2).
• 50% tariff on aluminum and steel imports from all countries into the U.S. (effective June 4).
• 25% tariff on all cars and trucks not built in the U.S. (effective April 2).
• 50% tariff on copper (effective August 1).
• Elimination of the U.S. de minimis treatment for low-value shipments. Goods valued at $800 or less are now subject to all applicable duties (effective August 29). 

There is a significant exemption for craftspeople that should be noted. Under the Exclusion section of the bulletin, the following products are excluded from the proposed tariffs:

9903.01.12:  Articles from Canada that are informational materials, including but not limited to publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD-ROMS, artworks, and news wire feeds.

On March 4th, 2025, the Canadian Government implemented 25% retaliatory tariffs for certain goods imported from the United States to Canada. The list included products such as appliances, apparel, footwear, cosmetics, and certain pulp and paper products. Many of these counter tariffs have been removed, and Canada’s counter tariffs on steel, aluminum and autos remain in effect as intensive negotiations with the U.S. continue.

The government has been taking steps to mitigate the impact of these countermeasures on Canadian businesses by establishing a remission process to consider requests for exceptional relief from the tariffs imposed, especially if the goods being imported are unavailable in Canada. 

Here’s a short video released by the Canadian Government: What are Tariffs?

If you are uncertain if your product will be subject to tariffs, here is an online tool put together by Canada’s Trade Commissioner Service: https://www.tariffinder.ca/en/

How are tariffs collected?

The collection of tariffs varies based on the market and the shipping carrier, and they are added to the previous duty costs. Generally, buyers are responsible for paying tariffs and any associated handling fees to the final shipping carrier when their items are delivered. In some cases, the pricing provided by postal carriers includes the cost of tariffs, allowing exporters or sellers to display a tariff-inclusive price at checkout. This means that buyers may be required to pay additional tariffs and fees on packages shipped internationally after purchasing an item.

What is a De Minimis Value exemption?

The De Minimis value (meaning too small to be considered) varies from country to country. A De Minimis Value exemption means that if you export goods valued below the specified threshold, those items will be exempt from duties (i.e., tariffs). 

On July 30th, the United States suspended the duty-free de minimis treatment for low-value shipments valued at US$800 or less, effective from 29 August 2025.  In Canada, the threshold is USD 20, meaning that if you import goods valued over that amount, you will incur duties (tariffs).

This exemption limit differs significantly across countries. Understanding the applicable De Minimis Value for each country can help you estimate the landed cost—the total cost the customer will pay. This information allows you to communicate the final price to the buyer. De Minimis value by country

How to Reduce Disruptions and Extra Costs for Your Business and Clients:

Be transparent! Before you ship to US buyers, let them know if their order may be subject to tariffs. Confirm with your client that their item(s) are being shipped from Canada, that a tariff may be applied after shipping, and that the client will pay that duty COD.

Conduct internal reviews to evaluate and streamline operations, identify cost reduction opportunities and implement necessary changes.

Start purchasing local or national products; source domestic alternatives to decrease reliance on expensive imports.

Engage in discussions and collaborate with importers and suppliers, and try to share the burden of costs.

Consider marginal cost pricing by setting export prices primarily based on variable costs to maintain competitiveness.

Some indirect implications of the tariffs:

Border Complications: If you ship raw materials or goods from Canada to the US or from the US to Canada, the new rules might mean extra inspections and more paperwork when your goods cross the border. Due to tighter border controls, you might experience longer wait times or added costs. 

Connecting with a customs broker could be a good solution for navigating some of these new complexities and ensuring paperwork is accurate. While this will cost you money, it could save you some guesswork! A list of brokers licensed by the Canada Border Services Agency (CBSA) can be found here: https://cscb.ca/en/customs-broker-search.

While the tariffs on goods crossing between the U.S. and Canada may seem challenging, understanding key aspects—like cost responsibilities and potential shipment delays, empowers you to plan ahead and adapt. Remember, as trade policies evolve, staying informed and proactive can help you turn these challenges into opportunities for growth and resilience

The removal of the US De Minimis exemption and CUSMA Compliance

Many Canadian craftspeople have relied on the De Minimis exemption to ship work across the border to the US. With this removed, craftspeople must determine whether their work is Canada-United States-Mexico Agreement (CUSMA) compliant to avoid extra duties. This compliance depends on whether they meet the product-specific rules of origin (PSRO). For crafts to qualify for preferential treatment, a certain percentage of their content must be North American, or the product must be “wholly obtained” in North America. To determine compliance, you must know the Harmonized System (HS) code for the specific craft and check the corresponding product-specific rules of origin. 

The CUSMA PSROs generally include 3 types of criteria:

• A change in tariff classification where the final good must be classified differently from the inputs used to make the good. For example, under the CUSMA rules of origin, a producer could import oak (classified in Harmonized System (HS) subheading 4407.91) from outside of North America to make a wood kitchen table (classified in HS subheading 9403.40).
• A value requirement where a certain percentage of value must be added in North America.
• A process requirement where the good must undergo a specified process, e.g., a shirt must be “cut and sewn” in North America.

How do I determine if a product meets the rules of origin and complete a certification of origin?

There are a few key steps to follow if you want to take advantage of duty-free shipping to the United States under CUSMA. We strongly recommend checking with a certified customs broker or U.S. Customs and Border Protection (CBP) before shipping.

Where to start:

1) Find your HS (Harmonized System) code.

This is a global code used to classify goods. You can use the Canada Tariff Finder to help identify your product’s code and see which tariffs apply.

2) Check the product-specific rules of origin.

Once you know your HS code, consult Chapter 4 of the CUSMA agreement to see if your product is eligible for duty-free treatment. The rules explain what portion of the product must be made in North America.

3) Complete a certification of origin.

There is no official mandatory form — it can even be included on an invoice — but it must contain specific information. To make it easier, you can use CBP’s Certification of Origin template to avoid errors.

4) Send the certification to your U.S. buyer/importer.

This document is required to claim the duty-free benefit when the goods enter the United States.

5) Consider requesting an advance ruling from CBP.

For peace of mind, ask the United States to confirm, before shipping, how your product will be treated. Details are available on the CBP website.

Find a customs broker:

• Permitted Customs Brokers Listing: United States
• Licensed customs brokers: Canada
• Customs broker search: Canada
• Offices in Canada: Reach out to a Trade Commissioner at a regional office who can provide a list of customs brokers.

Key Resources & Links

Governmental Statements on Tariffs:

• US Fact Sheet on Imports – February 2nd, 2025
• US Amendment to Tariffs – March 3, 2025
• Canadian List of Products – March 4, 2025
• Canadian Customs Notice – March 4, 2025
• Canadian Tariff Rules and Regulations 

Canadian Government and Trade Agencies:

• Tax Relief program for businesses impacted by tariffs – On March 21, 2025, the Government of Canada announced actions to support workers and businesses affected by tariffs.
• Subscribe to the Creative Export Strategy newsletter – The Creative Export Canada (CEC) program, which is part of the Creative Export Strategy, provides visibility and funding to help Canadian creative works achieve financial success abroad. 
• Government of Canada – Interprovincial Trade -Government of Canada is removing more than half of the federal exceptions to the Canadian Free Trade Agreement to strengthen Interprovincial Trade
• International Trade – Global Affairs Canada – Explore Canada’s free trade agreements, foreign investment promotion and protection agreements, plurilateral agreements and World Trade Organization agreements.
• Invest Canada – Market Access – Invest in Canada is Canada’s foreign direct investment attraction and promotion agency. This means working with partners across the country and worldwide to attract global companies and support their expansion plans in Canada.
• Export Services – Global Affairs Canada – Learn how to sell your products and services abroad, receive support services, financing, apply for permits and more.
• CanExport SME Applicant Guide – The CanExport SMEs program of Canada’s Trade Commissioner Service is designed to encourage small and medium-sized enterprises (SMEs) to export Canadian goods and services to new international markets.
• Business Benefits Finder – Directory to find grants and contributions, loans, tax credits, wage subsidies and other business support
• Export Checklist – Get information on the obligations, guidelines and procedures for reporting the goods to the Canada Border Services Agency (CBSA).
• Trade Commissioner  – The Trade Commissioner Service helps Canadian businesses grow by connecting them with funding and support programs, international opportunities, and a network of trade commissioners worldwide.

Context and Economic Significance

Canada’s craft sector is a vital part of the creative industries, making a significant contribution to the nation’s economy and cultural heritage. In 2022 alone, Canada’s creative industries, including crafts, generated approximately $58.5 billion in GDP, accounting for 2.1% of the country’s total GDP and employing 648,825 people. Specifically, the craft subsector, which includes textiles, jewelry, ceramics, furniture, housewares, musical instruments, and other handmade craft objects, made substantial contributions with exports valued at $5.9 billion to the United States.

Dependence on the U.S. Market

The United States has consistently been Canada’s largest export market for creative goods. In 2022, U.S. exports accounted for 68% of Canada’s total creative exports. Within this framework, the craft sector stands out prominently:

• Craft alone accounted for $5.9 billion, making it the largest category within Canada’s creative exports to the U.S.
  
• The craft sector’s exports to the U.S. represented 88.8% of the total exports from this subsector, illustrating an exceptionally high dependence.
  

Current Tariff Crisis

The re-election of President Donald Trump in 2024 and subsequent invocation of the International Emergency Economic Powers Act (IEEPA) led to a dramatic shift in the trade relationship between Canada and the U.S. Effective March 4, 2025, a 25% tariff was imposed on Canadian imports, although temporarily deferred for goods qualifying under the Canada-United States-Mexico Agreement (CUSMA) until April 2, 2025

Immediate Financial Impact

The craft sector is anticipated to face severe repercussions from these tariffs:

• The Crafts sector, which exported $5.9 billion worth of goods to the U.S. in 2022, is expected to experience the most significant financial impact. Canadian Heritage (PCH) estimates that with a 25 percent U.S. tariff, exports would decrease by $736 million to $1.5 billion, representing 11 percent to 22 percent of all Canadian Crafts exports (goods and services) to the world.
  
• Further compounding this issue, the threatened removal of the de minimis exemption, previously allowing duty-free shipping for goods under $800, would significantly raise operational costs, reduce competitiveness, and impact profit margins for Canadian craft businesses exporting to the U.S.
  

Broader Economic Consequences

Beyond immediate revenue losses, these tariffs could trigger a broader economic downturn affecting multiple sectors:

• Production costs for craft businesses would escalate due to increased costs of key imported materials like metals, textiles, and jewelry components, targeted by Canada’s retaliatory tariffs.
  
• Consumer confidence could diminish, leading households to prioritize essential goods over non-essential items, further reducing demand for craft.
  
• According to Oxford Economics Canada, the Arts, Entertainment, and Recreation sectors could experience a 5% to 6% decline in their economic value due to broader economic instability caused by tariff increases. These increases affect secondary income sources, such as community courses that are common offerings among professional craftspeople.
  

Canada’s Response and Need for Further Action

The Government of Canada has responded to the U.S. imposing tariffs on Canadian goods by introducing two retaliatory tariffs.  Round one, which entered into force on March 4, 2025, targets goods worth approximately CA$30 billion and includes a limited list of cultural products, mainly from the Crafts sector (particularly apparel (shirts, pants, coats), accessories like handbags (leather) and some types of jewelry), and Visual Arts sector (e.g., paintings and drawings).   

The second round, which targets a broader list of goods worth approximately CA$125 billion, was initially scheduled to take effect on March 25, 2025, but was delayed until April 2 in response to the U.S. waiving the 25 percent tariffs on CUSMA-compliant Canadian goods. The round two list targets a broader list of goods worth approximately CA$ 125 billion.

Canada’s retaliatory tariffs will raise the cost of key primary materials imported from the U.S. by Canadian Craft and Visual Arts businesses. Round one targets materials such as metals, textiles, and jewelry, while round two, if implemented, would affect goods like paper, pencils, paints, and varnishes. These tariffs could drive up production costs, reduce profit margins, and reduce the competitiveness of affected businesses. 

To mitigate these impacts, the Government of Canada has introduced counter-tariffs on U.S. imports, established a $5 billion Export Development Canada fund, and launched a $500 million favourable loan program via the Business Development Bank of Canada, specifically aimed at supporting businesses directly impacted.

However, given the scale of the potential impacts, these measures alone are insufficient, and many craftspeople would need assistance navigating these applications. Additional supports required include:

• Extended and increased direct financial support targeted explicitly at craft entrepreneurs and businesses to navigate the operational and economic disruptions caused by tariffs.
• Enhanced export diversification initiatives and trade missions to reduce dependency on the U.S. market by expanding market opportunities in Europe, Asia, and Latin America.
• Clear guidance and advocacy efforts to navigate exemptions and reduce border processing disruptions, particularly under the ambiguous IEEPA “informational materials” exemption.

If you and your business are affected by the tariffs, see our Tariff Toolkit, above, for resources.

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^[1] Statistics Canada, International trade of culture and sport products (2022). Due to measurement limitations, however, estimates of trade for the Craft sub-domain may be overstated, as the sub-domain currently includes various manufactured products, that originate from creative artistic activities as well as hand-made craft goods. 

^[2] Statistics Canada, International trade of culture and sport products (2022).
^[3] Statistics Canada, International trade of culture and sport products (2022). 
^[4]  All Canadian cultural goods are eligible to enter the U.S. duty-free under CUSMA if they are sufficiently produced or transformed within North America. Eligibility criteria are primarily outlined in Chapter 4 titled “Rules of Origin and Origin Procedures”. 
^[5] https://www.oxfordeconomics.com/
^[6]
[7] Under IEEPA there is an exception for “information and informational materials” under which the Books and Periodicals sector appear to fall. This category includes items such as publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD ROMs, artworks and news wire feeds. The scope of this exception remains unclear. U.S. Customs and Border Protection has yet to publish a list of Harmonized System codes in the Federal Register to clarify which goods qualify under the exception. 

Protecting Canada’s Craft Sector: A Letter Writing Campaign

As international trade tensions escalate, Canada’s craft sector is facing growing pressures. The Canadian Craft Federation launched a national letter writing campaign, urging craftspeople and craft advocates to contact their local representatives. The message is clear: tariffs and trade instability are pricing Canadian makers out of vital markets—particularly the U.S.—and putting livelihoods at risk.