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Canada Trade Surtax Shopify Merchants Published April 14, 2026 · Updated April 14, 2026 · 12 min read

Canada Surtax on Chinese Goods 2026: What Importers and Shopify Merchants Must Know

Canada has imposed multiple layers of surtaxes on goods imported from China, ranging from 25% on steel and aluminum products to a now-modified 100% measure on electric vehicles. In 2026, the rules have evolved — the EV surtax was replaced by a tariff-rate quota system in March 2026, consultations are ongoing for batteries and solar panels, and steel/aluminum measures have been tightened further. This guide breaks down what's currently in force, what categories are affected, and how Shopify merchants sourcing from China can protect their margins.

In this guide

Background: Why Canada Introduced These Surtaxes

Canada's surtax regime targeting Chinese goods did not emerge in a vacuum. Beginning in mid-2024, the Government of Canada announced a series of targeted surtaxes in direct response to what it characterized as unfair trade practices — specifically the use of state subsidies to flood global markets with underpriced goods.

The measures align closely with U.S. actions under Section 301 of the Trade Act of 1974 and reflect a broader G7 consensus that Chinese state subsidies in the manufacturing sector distort competition in strategic industries. Canada's approach, however, is implemented through Orders-in-Council rather than through Section 301-style legislative authority, meaning the surtaxes are imposed at the executive level and administered by the Canada Border Services Agency (CBSA).

The stated policy goals are threefold:

  1. Protect Canadian workers in steel, aluminum, and emerging clean-technology sectors
  2. Level the playing field for domestic manufacturers against artificially cheap Chinese imports
  3. Align with allied nations — particularly the United States, the European Union, and the United Kingdom — who have enacted similar protective measures

For importers and Shopify merchants sourcing products from China, the practical result is higher landed costs, more complex customs declarations, and heightened compliance obligations.

Current Surtax Rates by Product Category (2026)

As of April 2026, the following surtax regimes are in effect under various Orders-in-Council administered by the CBSA:

Product Category Surtax Rate Effective Date Legal Authority
Steel and aluminum goods (Chinese origin) 25% October 22, 2024 China Surtax Order (2024)
Steel outside tariff-rate quotas (non-CUSMA countries) 50% August 1, 2025 Steel Goods Surtax Order (SOR/2025-155)
Steel derivative goods (Chinese melted-and-poured) 25% December 2025 Steel Derivative Goods Surtax Order
Electric vehicles from China (within quota) 6.1% MFN March 1, 2026 China Surtax Order (2024) Amendment
Electric vehicles from China (over quota) 100% March 1, 2026 China Surtax Order (2024)

Important note on precedence: The CBSA has established a hierarchy for surtax application. When multiple surtax orders could apply to a given product, only one applies — following an explicit order of precedence. Generally, the China-specific surtax takes priority over general country-of-origin surtaxes for the same product.

Electric Vehicles: From 100% Surtax to Tariff-Rate Quota

The 100% surtax on Chinese-made electric vehicles — announced August 26, 2024 and effective October 1, 2024 — was one of the most headline-grabbing trade measures Canada had introduced in decades. It doubled the cost of importing any battery-electric or plug-in hybrid vehicle manufactured in China, effectively shutting most Chinese EV brands (BYD, NIO, Xpeng, Zeekr, etc.) out of the Canadian market.

The March 2026 pivot: Effective March 1, 2026, the Government of Canada replaced the flat 100% surtax with a Tariff-Rate Quota (TRQ) system:

This shift signals a nuanced policy approach: Canada wants to allow limited EV imports from China (to give consumers some pricing relief and supply flexibility) while still protecting the domestic and North American EV supply chain from large-scale market disruption.

What this means for importers: If you're importing EVs from China, your landed cost picture changed dramatically on March 1, 2026. Within the quota, you're looking at 6.1% instead of 106.1% effective cost. But quota fill rates will be monitored closely — if the 24,500-unit ceiling is hit early in the period, all subsequent shipments revert to the 100% rate. Track quota utilization through the CBSA.

Steel and Aluminum: The 25% Surtax and Its Layers

The 25% surtax on Chinese steel and aluminum (effective October 22, 2024, under the China Surtax Order 2024) applies to goods classified in Schedule 2 of that Order. This covers a broad range of products including:

The surtax is calculated on the value for duty (VFD) of the imported goods — not on the duty-included value. So if you import $10,000 worth of Chinese aluminum extrusions, you owe $2,500 in surtax on top of any applicable MFN duties.

Additional steel layers in 2025–2026:

Canada did not stop at a single steel measure. A cascade of additional orders followed:

  1. Steel Goods and Aluminum Goods Surtax Order (CN25-28): Introduced a 25% surtax on steel goods with Chinese melted-and-poured provenance — effectively targeting transshipment through third countries. If steel was melted and poured in China, the surtax applies regardless of where the final product was manufactured.
  2. Steel Derivative Goods Surtax Order (CN25-33): Extended surtax coverage to goods that contain steel components but are not themselves classified as steel goods — things like certain appliances, machinery parts, construction materials, and fabricated metal assemblies. The 25% rate applies.
  3. General Steel TRQ Surtax (CN25-24, SOR/2025-155): From August 1, 2025 through December 25, 2026, a 50% surtax applies to steel imports from non-CUSMA countries (i.e., neither the U.S. nor Mexico) that exceed established tariff-rate quota thresholds. Chinese steel frequently falls into this category.

Remission note: A temporary remission that had allowed businesses using steel in manufacturing or food/beverage packaging to reclaim surtax payments expired February 1, 2026. Importers who relied on that remission are now facing higher effective costs with no relief mechanism.

What's on the Horizon: Batteries, Solar, Semiconductors

In September 2024, the Government of Canada launched public consultations on potential surtaxes for additional strategic product categories:

As of April 2026, no formal surtax order has been issued for these categories, but the consultations are closed and the government is reviewing submissions. Given the pattern established with EVs and steel — consultations followed by Orders-in-Council within a few months — merchants sourcing any of these categories from China should be preparing for potential surtaxes in the H2 2026 to 2027 window.

The risk is not hypothetical. The U.S. has already enacted steep Section 301 tariffs on Chinese solar panels (50%) and batteries (25% rising to higher levels), and Canada has historically aligned its trade measures with U.S. equivalents.

How Surtaxes Stack With Regular Import Duties

Canada's surtaxes are imposed in addition to regular MFN import duties under the Customs Tariff. They do not replace standard duties — they layer on top.

Example calculation — Chinese steel angle bar:

ComponentRateAmount
Value for Duty—$5,000
MFN Duty (HS 7216.31)0%$0
China Surtax (Steel)25%$1,250
Total Payable$6,250

Example calculation — Chinese aluminum extrusion:

ComponentRateAmount
Value for Duty—$8,000
MFN Duty (HS 7604.10)6%$480
China Surtax (Aluminum)25%$2,000
Total Payable$10,480

Key point: The surtax is always calculated on the value for duty, not on the duty-included price. This is consistent with how Canada applies most ad valorem surtaxes under the Customs Act.

For goods subject to multiple surtax orders (e.g., Chinese melted-and-poured steel arriving via a third country), the CBSA's precedence rules determine which single surtax applies. You cannot be charged two surtaxes simultaneously for the same underlying measure — but you can be charged a regular duty plus one surtax.

Remission Programs and Duty Relief

Despite the tightening regime, several relief mechanisms remain available:

Duties Relief Program: Available for goods that are imported, processed or used in Canada, and then exported. Steel and aluminum inputs that go into manufactured goods subsequently exported may qualify for surtax relief through the CBSA's Duties Relief Program. Applications are processed through CARM (CBSA Assessment and Revenue Management system).

Duty Drawback: Importers who have paid surtax on goods later exported from Canada can claim a refund under the Duty Drawback program, subject to CUSMA provisions.

China Surtax Remission Orders: A series of temporary remission orders have provided targeted relief for specific industries — for example, certain solar racking components, specialized manufacturing inputs, and infrastructure projects. These orders have narrow eligibility criteria, time-limited periods, and require documentation of prior supply chain commitments. Importantly, the remission order covering steel used in food/beverage packaging expired February 1, 2026.

Practical advice: If you believe your goods may qualify for remission, work with a licensed customs broker or trade counsel before filing your B3 entry. Retroactive remission claims are possible but administratively complex — it's better to identify eligibility upfront.

Impact on Shopify and E-Commerce Merchants

For Shopify merchants who source from China, Canada's surtax regime creates three distinct pressure points:

Product Cost Increases

A 25% surtax on steel components means that a product with $3 worth of Chinese steel in it could carry $0.75+ in additional duty liability that many merchants haven't priced in. If you're selling kitchen tools, hardware, electronics enclosures, or fitness equipment, you almost certainly have affected inputs.

HS Code Classification Matters More Than Ever

The applicability of Canada's China surtaxes depends entirely on HS code classification. Products misclassified into the wrong tariff item might inadvertently avoid a surtax (an audit risk) or get hit with a higher one than necessary (a cost risk). With multiple overlapping surtax orders — each with its own schedule of HS codes — getting classification right is no longer optional.

Country-of-Origin Documentation

The surtax applies to goods that originate in China, determined under the Marking Goods (Non-CUSMA Countries) Regulations. Goods transshipped through Vietnam, Mexico, or Malaysia and claimed as originating there must genuinely undergo substantial transformation in those countries. The CBSA has increased scrutiny of country-of-origin claims since 2024, and goods that are merely repackaged or assembled using Chinese components with no substantial transformation will still be treated as Chinese-origin.

For merchants using drop-shipping suppliers or overseas 3PLs, this is a significant compliance risk. The onus is on the importer of record to have documentation supporting origin claims.

Competitive Dynamics

Merchants who have already shifted sourcing to Vietnam, Bangladesh, India, or Mexico are at a structural cost advantage over those still primarily sourcing from China. The surtax regime adds approximately 25–100+ percentage points to cost on covered goods, which is impossible to absorb on thin-margin consumer products.

How to Calculate Your Total Landed Cost

Total landed cost (TLC) for Canadian imports from China is calculated as follows:

Canada China Import — Total Landed Cost Formula
Product Cost + Freight + Insurance
+ MFN Duty (on value for duty)
+ China Surtax (on value for duty)
+ GST/HST (on [value for duty + duties + surtaxes])
+ Brokerage + Other Fees
= Total Landed Cost

Worked example — Chinese stainless steel cookware:

Line ItemCalculationAmount
Value for Duty (VFD)Invoice + freight$4,000
MFN Duty @ 0%HS 7323.93$0
China Surtax @ 25%25% × $4,000$1,000
GST @ 5%5% × ($4,000 + $0 + $1,000)$250
BrokerageFlat fee estimate$150
Total Landed Cost$5,400
Effective rate over invoice+35%

This kind of calculation needs to be run for every SKU, every shipment, every season — not just once. Rates can change with new Orders-in-Council, HS code reclassifications, or quota fills. Manual spreadsheets break down quickly at scale.

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Frequently Asked Questions

Q: Does the Canada China surtax apply to goods shipped from the U.S. but made in China?
Yes. The China Surtax Order applies based on origin, not shipping country. If goods originate in China under Canada's Non-CUSMA Country of Origin Regulations — meaning China is where the goods were grown, extracted, or last substantially transformed — the surtax applies regardless of whether they are shipped directly from China, transshipped via the U.S., or re-exported from a bonded warehouse in a third country. The CBSA can and does verify origin through supplier documentation requests.
Q: I sell consumer goods on Shopify. Does the 25% steel surtax affect me if my products just contain some steel?
It depends on how your product is classified. The original 25% steel surtax under the China Surtax Order (2024) applies to goods in Schedule 2 — which is primarily steel and aluminum mill products, not finished consumer goods. However, the Steel Derivative Goods Surtax Order (CN25-33, December 2025) extended coverage to certain downstream goods containing steel. If your product's HS code appears in the schedule of that order, you may owe the surtax even if you're selling a finished product, not raw steel. Always verify your specific HS codes against CBSA's published schedules.
Q: Are there any exemptions for small importers or small shipments?
There is no de minimis exemption from the China surtax. Canada's de minimis threshold for duties and taxes is CAD $40 for courier/postal imports, but surtaxes under Orders-in-Council are not subject to the same threshold. Both commercial and personal importations are covered — the CBSA explicitly addresses this in Customs Notice 24-36 (paragraph 8). For B2C Shopify orders shipped directly to Canadian consumers from China, the surtax should be collected at the border.
Q: What happened to the 100% EV surtax? Is it completely gone?
No — it has been transformed into a two-tier system. As of March 1, 2026, a Tariff-Rate Quota (TRQ) replaced the flat 100% rate. Within the quota (24,500 vehicles for the March 2026–February 2027 quota year), EVs from China pay the standard 6.1% MFN rate. Once the quota is filled, the 100% surtax kicks back in for all subsequent shipments. The EV surtax is not gone — it's been converted into a market-access tool.
Q: Can I claim back surtax I've already paid if I export the goods?
Yes, in many cases. Canada's Duty Drawback Program allows importers to claim a refund of duties and surtaxes paid on goods that are subsequently exported from Canada. The claim must be filed within four years of the date of import, and you must have documentation linking the exported goods to the original import entry. For goods used in manufacturing (inputs that become part of an exported finished product), the Duties Relief Program may be a better fit — it provides an upfront exemption rather than a retroactive claim.
Q: Is the Canada surtax on Chinese goods permanent?
No surtax order specifies permanent status, but they have been extended repeatedly. The original China Surtax Order (2024) for EVs specified it would be in force until further amended — and it was indeed amended in March 2026. The steel and aluminum surtax has no stated sunset date in its current form. The Steel Goods Surtax Order runs through December 25, 2026, per SOR/2025-155. Given the political trajectory in Canada and allied nations, importers should plan for these measures to remain in some form for the medium term — likely 2–5 years.

Sources

Disclaimer: This article is provided for general informational and educational purposes only and does not constitute legal, customs, or tax advice. Surtax rates, schedules, and applicable categories are set by Orders-in-Council and are subject to change without advance notice by the Government of Canada. The information in this article was accurate as of the publication date (April 14, 2026) but may not reflect subsequent amendments. Importers and merchants are strongly encouraged to consult with a licensed Canadian customs broker, trade lawyer, or qualified tax professional before making sourcing, pricing, or compliance decisions based on the information herein. TariffShield and Attahir Labs Inc. are not responsible for any losses, penalties, or compliance failures arising from reliance on this article.