in effect
This is a presidential executive order (EO 14325, signed July 31, 2025) that amends an earlier order from February 2025 which imposed tariffs on Canadian imports as a response to a declared national emergency over illicit drug flows, primarily fentanyl, across the U.S.-Canada border. It raises the tariff rate already applied to most Canadian goods and adds new anti-circumvention rules for goods routed through Canada to evade duties.
The additional tariff on most Canadian goods — those not covered by the USMCA free-trade agreement — rises from 25 percent to 35 percent, effective 12:01 a.m. Eastern time on August 1, 2025. Canadian energy products and potash remain at their previously set lower rates (10 percent) and are not affected by this increase. Goods determined by U.S. Customs and Border Protection to have been routed through Canada specifically to dodge these duties face a higher 40 percent penalty rate, plus any other applicable customs fines. Every six months, the Commerce and Homeland Security Departments must publish a public list of countries and specific facilities found to be involved in those evasion schemes. The Secretary of Homeland Security is directed to continue monitoring the border situation and to recommend further action — up or down — depending on whether Canada cooperates or retaliates.
U.S. importers buying Canadian goods that do not qualify under USMCA (such as certain manufactured products) will pay the higher 35 percent duty, which typically raises their costs and may be passed on to U.S. consumers or businesses in downstream supply chains. Canadian exporters of those goods face a less competitive U.S. market. Companies anywhere in the world that route non-Canadian products through Canada to access lower duty rates risk the 40 percent penalty rate and potential customs fraud penalties under U.S. law.