Canada: Q4 Canadian Trade Compliance Briefing Note: 10 Canadian trade issues to follow in the final ten weeks of 2025

While Canada continues to expand its trading relationships through FTAs, the future of its most significant FTA, the USMCA/CUSMA, and its trading relationships with the United States and China remains uncertain. Canadian importers and exporters face continued regulatory changes (e.g. customs valuation amendments, novel sanctions reporting requirements, supply chain reporting) and administrative changes (e.g. CARM, ACE Portal) in a rising protectionist trade environment. The Carney administration has continued to roll out policy and economic initiatives to respond to Canada’s trade impediments (e.g. the Strategic Response Fund, Buy Canadian Policy, Regional Tariff Response); however, the budget, due to be tabled on November 4, will officially put pen to paper on the Government of Canada’s spending and trade-related policy initiatives for 2026. In this context, Baker McKenzie’s Canadian trade & customs team highlights ten Canadian trade issues (in no particular order) to keep top of mind for the remaining ten weeks of Q4 2025.

1. Canada-US Trading Relationship: Since Canada floated a July 21 deadline to negotiate a new trade and security deal with the US, no such agreement has been inked, 35% tariffs apply to Canadian origin non-CUSMA/USMCA qualifying goods, and section 232 measures continue to impact Canadian auto, steel, aluminium, copper, lumber, furniture and cabinet exports to the US (see a summary of current Canada-US tariffs in the Annex). While Prime Minister Carney seems to have cautiously confirmed that a sectoral deal on US section 232 tariffs targeting Canadian steel and aluminium may be ready for approval at the October 29 APEC Summit, section 232 measures would remain on a number of key Canadian industries – autos, copper, lumber. To date, Canada has made significant concessions to the US (e.g. terminating the implementation of a digital services tax, removing retaliatory tariffs on the vast majority of US origin goods, withdrawing appeals related to US duties on softwood lumber) with seemingly little progress, while the US continues to levy section 232 measures on new sectors (e.g. furniture, kitchen cabinets, trucks). Canada continues to provide relief to importers adversely affected by retaliatory tariffs by extending temporary remission orders and providing company-specific relief. Importers and exporters impacted by Canada-US tariff uncertainty should watch announcements during the APEC Summit closely. Any agreement on US steel and aluminium measures may provide a template for resolving further US national security concerns addressed by remaining section 232 measures.      
2. Canada-China Trading Relationship: Canada continues to navigate trade uncertainty with China after levying 25% tariffs on Chinese steel and aluminium products, 100% tariffs on Chinese EVs, and 25% tariffs on steel goods melted and poured in China and aluminium goods smelted and cast in China. In response, China levied tariffs on Canadian seafood, canola, and pork products following its conclusion of an anti-discrimination investigation. These tariffs add to further import measures implemented by China and ongoing investigations against Canadian-origin goods, including: SPS import measures on certain beef and poultry products; and the anti-dumping investigations focused on Canadian origin canola seeds initiated by MOFCOM in September 2024 and Canadian origin pea starch in August 2025. Recent remarks by China’s ambassador to Canada (“If Canada removes the unilateral unjustified tariffs on Chinese products, China will also reciprocate accordingly”), further diplomatic outreach by the Prime Minister, and Canada’s recent remission order providing relief on Chinese origin steel and aluminium products that are not produced in Canada, may foreshadow a resetting of Canada-China relations. Importers and exporter impacted by these trade measures should continue to monitor the thaw in this trading relationship throughout the remainder of 2025.   
3. USMCA/CUSMA Review: The mandatory joint review of the USMCA/CUSMA papered in Article 34.7 of the agreement is scheduled to occur in 2026, six years after it entered into force on July 1, 2020. The aim of the review is to determine whether the parties wish to extend the FTA for another 16-year term as-is, and/or to amend the text to address the FTA’s operation and application. If the parties fail to reach an agreement on extending the FTA prior to July 1, 2026, the FTA will terminate in 2036 after a decade of annual joint reviews (allowing for a subsequent extension of the FTA). Canada, the US and Mexico have all initiated public consultations, seeking input on the operation of the USMCA/CUSMA. Canada’s consultation is open until November 2, 2025: Global Affairs Canada is accepting submissions via e-mail (CUSMA-Consultations-ACEUM@international.gc.ca). Importers and exporters should seize their first official opportunity to participate in the pending review process, especially those operating in sectors that have been subject to the FTA’s dispute settlement process (e.g. dairy, solar), or the subject of US tariffs (i.e. lumber/timber, furniture, copper, steel, aluminium, automotive, pharmaceuticals). The FTA’s operation in respect of these sectors are the most vulnerable to amendment through the review process. Importers should also consider the impact on their supply chains of a possible FTA-mandated rebuttal presumption that certain goods are mined/manufactured with forced or child labour or a re-export ban applicable to other FTA members once goods are denied entry into one FTA member’s customs territory on grounds of forced labour.
4. Sanctions Evasion Reporting Requirements: Canada continues to coordinate its sanctions and AML regimes, aiming to curb sanctions evasion and enhance enforcement in light of Canada’s fifth round of mutual evaluations by the Financial Action Task Force (FATF), commencing November 2025. Notably, a recent evaluation of Global Affairs Canada Sanctions Bureau highlights difficulties in the agency’s operational capacity as a regulatory body and its enforcement track record. Accordingly, the Government is tackling sanctions evasion through the civil enforcement capabilities of the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), an established regulatory body. As of April 1, fast-tracked amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) require “traders” (persons that purchase, sell or cause commercial goods to be imported or exported to or from Canada, regardless of ownership) to declare to a CBSA officer whether imported or exported goods are proceeds of crime or are related to money laundering, terrorist financing, or sanctions evasion.  CBSA policy confirms that the current commercial processes used to declare imports and exports and current record keeping processes will satisfy these new declaration and compliance obligations. Importers and exporters should review their compliance programs to ensure they meet the new monitoring and reporting requirements. Canada’s sanctions enforcement will be under the microscope in the weeks ahead in response to the FATF evaluation. There is a high risk that active civil enforcement of PCMLTFA provisions aimed at curbing sanctions evasion (applicable to importers, exporters and reporting entities) will continue to be prioritized given FINTRAC’s recent activities (e.g. levying its largest penalty on a reporting entity to date, in part, for its failure to report suspected sanctions evasion).
5. Trade Remedies Enforcement: The CBSA has continued to bolster its trade remedy enforcement by introducing procedural changes and administering what may be a record breaking year of AD/CVD investigations and administrative reviews through its new portal, ACE. At the end of 2024, the CBSA shifted toward more discretionary annual administrative reviews as the default mechanism for updating normal values, export prices and amounts for subsidy for goods subject to SIMA measures. Closely following this shift, the SIMA Registry stopped issuing the SIMA Handbook, historically a publicly accessible document, citing dissemination compromising the CBSA’s trade enforcement. This about-face has left importers and exporters in the dark on the precise operation of the CBSA’s new tiered administrative review process. In 2025, the CBSA initiated eight investigations on imported goods, with the latest introduced in mid-October targeting thermoformed molded fibre tableware (i.e. paper plates and bowls) from China with importer and exporter responses due on November 5, 2025 and 21, 2025, respectively. Three of the ongoing investigations on new products will conclude in Q4 (steel strapping, thermal paper rolls, carbon and alloy steel wire). Given these events, and the Prime Minister’s recent announcement on hiring more CBSA officers to tackle unfair trade practices, Canadian importers and foreign exporters should assess how these procedural changes and investigations may impact their supply chains and whether risk mitigation measures are necessary to implement in 2026 (e.g. seeking information on exporter normal values prior to import, accruing for potential retroactive SIMA assessments, sourcing new suppliers for subject goods from non-subject countries).
6. Canadian Steel Importation Measures: While Canadian steel importers face further hurdles to sourcing foreign origin steel, Canadian steel producers continue to benefit from added domestic trade protections.  Since August 1, a 50% surtax applies to ROW steel imports, with the exception of steel originating in Mexico and the United States, that exceed a country-specific TRQ and where importers fail to obtain a shipment-specific import permit. Two more months of the second steel surtax quarter remain where TRQs will be administered on a first-come-first-serve basis. In order to avoid the 50% surtax, importers must ensure adequate quota remains for the specific steel product (by HS Code and by country of origin) and must obtain a shipment-specific import permit issued by Global Affairs Canada. Steel importers should continue to watch for updates to the Notice to Importers to ensure the TRQ allocation process is not amended prior to the third steel surtax quarter (i.e. no longer first-come-first serve), beginning December 26, 2025, and should continue to plan ahead for 2026 foreign steel imports to ensure adequate TRQ remains and import permits remain valid for a shipments date of entry.
7. CARM 1 Year Anniversary: October 21, 2025 marks 1 year of CARM implementation. Importantly, the CBSA can now examine an entire year of importer data, providing an opportunity to identify inconsistencies in accounting fields aligned with verification and compliance priorities. Importers may be subject to trade verifications at any point in time, on matters not included in the CBSA’s published priorities. Importers that altered their declared tariff classification, origin, or value due to recent trade complexities should ensure they are prepared for a verification. Additionally, importers should follow the CBSA’s response to the Standing Committee on International Trade’s recommendations to address CARM operational issues, including establishing a release prior to payment waiver or exemption for low value/low volume goods.
8. Proposed Amendments to the Valuation for Duty Regulations: The proposed amendments to the CBSA’s Valuation for Duty Regulations continue to hang in the balance, as importers await revised amendments or clarifying policy to determine the scope of the amendments and whether their valuation methodologies are effected. Recall that the proposed amendments propose a “last sale” approach to customs valuation (we write about it here), which has the potential to increase the declared value for duty of imported goods, directly increasing duties and taxes owing, and indirectly increasing the cost of doing business in Canada. Importers should continue to watch both Part I (should regulations be subject to further consultation) and Part II (should the regulations be in final form) of the Canada Gazette for publication of the proposed amendments and any new or revised D-memoranda and Customs Notices advising of their interpretation and coming into force date. Now that the dust has settled on CARM implementation and Canada has removed the majority of its retaliatory tariffs, the CBSA may have regulatory and enforcement capacity to undertake this significant about-face on valuation.  
9. Canada-Indonesia Free Trade Agreement: While Canada continues to negotiate a Canada-ASEAN free trade agreement, on September 24, 2025, Canada signed its first bilateral FTA with an ASEAN nation – Indonesia – with entry into force in 2026. This agreement will terminate or reduce tariffs immediately, or over a 15 year period, on over 95% of Canadian exports to Indonesia including on agricultural and seafood products, wood, pulp and paper and chemicals. See pg. 21 of the FTA text for staging categories, pg. 25 for Canada’s tariff schedule and pg. 266 for Indonesia’s tariff schedule.  Entry into force of this FTA will create further duty-effective supply chain options in Asia for Canadian importers and exporters, adding to Canada’s existing FTAs with Korea (CKFTA), Vietnam (CPTPP), Brunei (CPTPP), Malaysia (CPTPP), Japan (CPTPP), and Singapore (CPTPP). This new FTA aligns with Prime Minister Carney’s goal to double Canada’s non-US exports over the next decade. Businesses planning supply chains for 2026 should review the FTA’s tariff schedule to determine whether duty mitigation opportunities may apply for existing import/export activities or whether there is an opportunity to begin to source goods from or export goods to Indonesia.  
10. Supply Chain Reporting: Multinational entities with reporting obligations under several supply chain transparency regimes, including Canada’s Supply Chains Act, can take advantage of the new template issued by Public Safety Canada in coordination with its UK and Australian equivalents. While use of the template remains optional, it is designed to reduce the administrative burden for entities reporting in these three jurisdictions ensuring that one report meets the seven common reporting requirements. Reporting entities planning reports for the 2026 reporting period, opening on January 1 and closing May 31, 2026, should review the template and consider the opportunities for efficiency in multi-jurisdictional reporting.

ANNEX – Canada-US tariffs in force as of October 22, 2025

* On August 1, 2024, the tariff rate increased on Canadian goods from 25% to 35%, and the US introduced a 40% tariff on goods transhipped in order to evade tariffs.

**Retaliatory tariffs on certain goods applicable as of March 13, 2025 were repealed on September 1, 2025.

*** Tariff rates increase to 30% on upholstered wooden furniture and to 50% for cabinets and vanities as of January 1, 2026.