Navigating U.S. Imports to Canada: Understanding the Surtax and Exempt Goods

Does importing goods from the U.S. into Canada under the current tariff climate feel like navigating a minefield? One wrong step–and you’re hit with a surprise surtax or unexpected duty. Wondering which products are affected and which ones aren’t? You’re not alone.

With shifting trade policies and complex customs rules, many importers find it challenging to stay on top of what’s subject to Canada’s 25% surtax on U.S.-origin goods. The good news? Not everything is impacted, and knowing which goods are exempt can save you serious money and headaches.

At BorderBuddy, our mission is to simplify cross-border trade. We help importers—from individuals to corporations—understand exactly what they’re paying for and why. This guide is your starting point for identifying which items are exempt from Canada's current surtaxes on U.S. goods.

Why the Surtax Exists

In response to U.S. tariffs imposed on Canadian steel and aluminum under the Trump Administration, the Canadian government applied retaliatory countermeasures on a wide set of U.S.-origin goods, which can be found here. While the original list covered over $16 billion in goods, many of those surtaxes are still active and continue to apply to both commercial and personal imports from the U.S. The good news? Not all U.S. goods are subject to this surtax—and understanding which items are exempt can make a major difference to your landed cost.

Vehicles: It’s All About the VIN

If you're importing a car, truck, motorcycle, or RV from the United States, don’t assume it’s automatically subject to surtax. The origin of manufacture matters far more than where the vehicle is sold. Interestingly, vehicles manufactured in Mexico, Canada, and overseas, regardless of the year (think brands like BMW, Audi, Mercedes, Volkswagen, Kia, Mazda, Mitsubishi, Toyota), are generally exempt from this surtax if they were made outside of the U.S.

A quick check of the first digit of the Vehicle Identification Number (VIN) can tell you a lot:

• 1, 4, 5 – United States (Surtax applies)
• 2 – Canada (Exempt)
• 3 – Mexico (Exempt)
• J – Japan (Exempt)
• K – South Korea (Exempt)
• W – Germany (Exempt)
• Y – Sweden/Finland (Exempt)

What this means: A vehicle purchased in Florida but manufactured in Mexico (VIN starting with 3) is not subject to the surtax. This is especially relevant for brands like Toyota, BMW, Mercedes, Volkswagen, Hyundai, and Mazda, whose North American manufacturing operations often span multiple countries.

‍Beyond Vehicles: Common Import Categories Exempt from the Surtax

Here’s a breakdown of popular U.S.-origin goods that are not subject to the 25% surtax, grouped by product type with HS Chapters and codes for reference where applicable.

1. Marine & Transport Equipment

• Boats (HS Chapter 89) – Includes personal watercraft, fishing boats, and some recreational vessels.
• Trailers (HS Chapter 87) – Including enclosed utility trailers and boat trailers.
• Tractors (HS 8701) – For farm or transport use, exempt under industrial/agricultural equipment categories.
• Engines for Vehicles – HS 8407 (spark-ignition) and HS 8408 (compression-ignition), critical for repair/importers of car parts.

2. Industrial & Agricultural Machinery

• CNC Cutting Machines – HS 8456.40.00.00; widely used in metal, wood, and textile processing.
• Excavators and Forklifts – Classified under Chapters 84 & 87.
• Grouting Equipment – HS 8474.31 / 8474.90; essential for construction and mining industries.
• Generators – HS 8502.11.00; portable and stationary generators for industrial, residential, or commercial use.

3. Electrical & Mechanical Components

• Lithium-Ion Batteries – HS 8507.60.00; commonly used in electronics, vehicles, and renewable energy storage.
• Electrical Transformers, Converters, Inductors – HS 8504.40.90.93; includes power supply components.
• Gearboxes & Transmission Parts – HS 8483.40; essential for motor and machinery repairs.

4. Agricultural Tools and Equipment

• Manual Agricultural Tools – HS 8201.10.10, 8201.10.90, 8201.30.10; including shovels, spades, hoes—tools often overlooked but important for compliance.
• Tractors (HS 8701) and possibly harvesters, seeders, etc. (HS 8432, 8433)—generally exempt but make sure to classify properly.

5. Specialized Equipment

• Spray and Blasting Machines – HS 8424.10, 8424.20, 8424.30, 8424.40; includes fire extinguishers, misting equipment, sandblasters—some lines are entirely duty-free.
• Water Meters & Pressure Gauges – HS 9028.20 and 9026.20; these precision instruments are typically used in utility infrastructure and plumbing projects.

6. Healthcare, Construction, and Food Processing: Other Key Exemptions

Canada has also issued several Remission Orders exempting a broad range of U.S.-origin medical supplies, construction products, food-processing equipment and agricultural inputs, including:

• Personal Protective Equipment (PPE): Face masks (surgical and N95), gloves, gowns, face shields (HS codes vary—e.g., 6307.90, 9020.00).
• Medical Equipment: Thermometers (HS 9025.19), ventilators (HS 9019.20), and other respiratory apparatus (HS 9020.00).
• Sanitation Equipment: Disinfectant sprayers (often HS 8424), hand sanitizing station.
• Refrigeration Units and Cold Storage Systems: Often classified under HS 8418
• Food Packaging Machinery: HS 8422.30 or 8422.40.
• Animal Feed and Ingredients: In limited cases, where a critical supply disruption was noted.
• Steel Products for Construction: Select rebar, pipe, and structural components (from the U.S. but not always made in the U.S., so origin matters).
• Modular Buildings and Pre-Fabricated Structures: Under HS 9406.

7. Technology & IT Hardware

Though not as widespread, select hardware components were exempted to avoid disruption to Canadian tech companies and data centers:

• Networking Equipment: Routers, switches (HS 8517.62), exempt in some remission cases.
• ‍Data Storage Equipment and Racks: HS 8471 and 8473-related items.

‍Why This Matters

Knowing which goods are exempt allows importers to:

• Price products more competitively.
• Improve landed cost forecasts.
• Avoid unnecessary payment of surtaxes.
• Accelerate customs clearance by classifying goods correctly.

Even if your item appears to fall into an exempt category, HS classification errors are a common source of extra costs. At BorderBuddy, we help you get it right the first time.

How BorderBuddy Can Help

At BorderBuddy, we bring clarity to complexity. Whether you're importing a Volkswagen that was made in Mexico to forklifts from Illinois, CNC machines from Texas, or lithium batteries from California, we’ll:

• Identify whether your goods are subject to surtax, regular duties, or are completely duty-free.
• Perform detailed HS code classification to ensure compliance.
• Help with customs documentation and provide clearance services.
• Support for CARM registration, delegation of authority, and CARM bonds for importers.

We work with ecommerce sellers, industrial buyers, vehicle importers, and anyone in between. If you’re unsure whether your import qualifies for surtax exemption, we’ll find the answer—fast.

For the latest and greatest on the latest Tariff updates, stay tuned here.

👉 Contact us today via email, call +1 (604) 229-0683 or Get a Quote and let BorderBuddy guide your next import with confidence.