Canada IEEPA Tariffs: The USMCA Complication
Canada received a 25% IEEPA tariff effective February 4, 2025. However, Canada is uniquely complicated for CAPE refund purposes because of the U.S.-Mexico-Canada Agreement (USMCA). Many Canadian goods entered the United States duty-free under USMCA preferential treatment — and those entries paid $0 in IEEPA duties, meaning there is nothing to refund.
The key question for Canadian importers is: which specific entries actually had IEEPA duties assessed?
How USMCA Affects Refund Eligibility
USMCA-qualifying goods that entered duty-free because of USMCA preferences paid no IEEPA duties and are not refundable. However, not all Canadian goods automatically qualify for USMCA treatment:
- Goods must meet USMCA rules of origin (typically requiring sufficient regional content)
- The importer must have claimed USMCA preference on the entry
- Some product categories have specific USMCA requirements that many goods don’t meet
Canadian goods that did not qualify under USMCA, or where USMCA preference was not claimed, paid the full 25% IEEPA rate. Those entries are eligible for CAPE refunds.
Review Your 7501s
For each Canadian-origin entry during February 2025–February 2026:
- Check whether USMCA preference was claimed (look for a “P” or “CA” in the Special Program Indicator field)
- Check the duty amount in the IEEPA column
- If IEEPA duty shows $0, that entry is not eligible
- If IEEPA duty shows a positive amount, include it in your CAPE CSV
Key Canadian Import Categories
Automotive: Canada is a major auto parts and vehicle supplier. Many Canadian auto parts qualify under USMCA (North American content is typically high for auto supply chains that cross the border multiple times). Check each entry carefully.
Energy and Resources: Canadian oil, gas, and raw materials. Energy products were explicitly addressed in some USMCA provisions and may have specific duty treatment.
Agricultural Products: Dairy, grains, and processed foods. Some are subject to TRQs (tariff-rate quotas) that may have affected duty assessment.
Manufactured Goods: Industrial machinery, packaging materials, and other manufactured goods from Canadian producers may not always have met USMCA rules of origin, especially if they incorporated significant third-country content.
When to Expect a Refund
For Canadian-origin entries that did pay IEEPA duties — typically non-USMCA goods or goods with third-country content — the CAPE refund process works identically to other countries. File through CAPE with the entry data showing actual IEEPA duty paid.
The challenge is identifying those entries among the larger universe of Canadian entries that paid no IEEPA duty. Work with your customs broker to filter your Canadian entry set to those with positive IEEPA duty assessments before preparing your CAPE CSV.