In July 2025, the Canada Border Services Agency
(“CBSA”) released its latest list of
trade compliance verification priorities (the “July
2025 update”).1 As the first adjustment to
CBSA verification priorities since January 2025, this update
provides the most recent indication of which commercial goods being
imported into Canada may be verified by the CBSA.2

Focus on Cross-Border Imports

Notably, the July 2025 update introduces three new compliance
priorities concerning imports from the United States (US). These
are:


Goods subject to the United States Surtax Order
(2025-01). This order was introduced in March 2025 in response
to US tariffs on Canadian goods imported into the US from Canada.
It applies a 25% surtax on the value for duty (the
“VFD”) of certain goods imported into
Canada that originate in the US.3

Goods subject to the United States Surtax Order (Steel and
Aluminum 2025). This order was also introduced in March 2025,
in response to US tariffs on Canadian steel and aluminum products
imported into the US from Canada. It applies a 25% surtax to steel,
aluminum, and certain other goods originating in the US and
imported into Canada.4

Goods subject to the United States Surtax Order (Motor
Vehicles 2025). This order was implemented in response to US
tariffs on Canadian-made vehicles and auto parts imported into the
US from Canada. It applies a 25% surtax to motor vehicles
originating in the US and imported into Canada.5

See our previous publications for more details on these
measures.6

These new compliance priorities reflect continued Canada-US
trade tensions, which have received significant political and
public attention in both countries. As long as the US surtax orders
remain in effect, companies importing US goods should expect
increased scrutiny from the CBSA as it seeks to enforce these
orders.

The CBSA’s mandate would extend to verifying eligibility for
surtax remission claims made by importers under the United States
Surtax Remission Order (2025). The CBSA has published its
interpretive guidance on how it intends to administer the order in
a Customs Notice.7 Given a lack of clarity surrounding
the CBSA’s evolving interpretations of the order, the
CBSA’s practical administration and enforcement could provide
further clarity as to the scope of the remission, including through
appeals and recourse sought by aggrieved importers.

Other Compliance Priorities

Several existing compliance priorities remain in place. These
are:


Tariff rate quota and classification of supply managed goods,
particularly frozen desserts containing 5% of dairy products;

GST and excise duties and taxes, notably the use of GST
exemption codes and whether vaping products are subject to excise
duties and taxes;

Import origin verifications under the Canada-European Union
Comprehensive Economic and Trade Agreement and the
Canada-United Kingdom Trade Continuity Agreement;

The Duties Relief Program, including verifications of licensees
importing supply managed goods;

Electric vehicles, steel, and aluminum subject to the China
Surtax Order (2024).8

Due to the “revenue neutrality” arising from
registrant commercial importers’ eligibility for input tax
credit (“ITC”) claims to recover 5% GST
payable on import, GST status declarations can be overlooked and
neglected.

Nonetheless, due to the interaction between the GST legislation
and the Customs Act, failure to use an appropriate GST
“exemption” code9 could lead to Administrative
Monetary Penalties (“AMPs”). If
available, there could also be a cash flow benefit derived from
obtaining upfront GST relief on import.

In certain circumstances where importers are ineligible for ITC
claims, the GST “exemption” codes may result in direct
tax savings. Where 13%/14%/15% HST could apply on consumer imports,
an available “exemption” code could relieve the HST. Note
that eligibility criteria may be quite technical and may require
careful research and analysis to determine their applicability,
including considering relevant jurisprudence.

Updated Verification Priorities

The July 2025 update identifies the following goods as tariff
classification verification priorities. The CBSA will verify
whether these goods are being correctly classified under their
appropriate tariff classifications.




Tariff Classification



Gloves (Round 3)
Headings 39.26, and 42.03



Bags (Round 3)
Heading 42.02



Spent fowl (Round 3)
Headings 02.07, 16.01, and 16.02



Freezers and other freezing equipment
Heading 84.18



Washers and dryers
Headings 84.50, and 84.51



LED lamps (Round 2)
Heading 85.39



Furniture for non-domestic purposes (Round 4)
Headings 94.01, and 94.03



Bicycle parts (Round 3)
Heading 87.14

The July 2025 update further identifies the following goods as
an origin verification priority. This priority ensures that the
origin, tariff treatment and duty rates of these imported goods are
properly declared.




Origin



Bedding and drapery (Round 3)
Headings 63.01, 63.02, and 63.03

The July 2025 update removes the following compliance priorities
previously identified by the CBSA: tariff classification of
disposable and protective gloves, and valuation of apparel items.
Also, imports affected by Canada’s decision to withdraw
Most-Favoured-Nation tariff treatment from goods originating in
Russia or Belarus are no longer identified as a compliance
priority.

In identifying an imported good for valuation verification, the
CBSA determines whether the VFD of the imported good is being
accurately declared. This determination could affect not only ad
valorem customs duties but also GST and other taxes imposed at the
border on import.

Footnotes

1. Government of Canada, “Trade compliance
verification” (Last Modified 4 July 2025).

2. Government of Canada, “Trade compliance
verification” (Archived, Last Modified 7 January
2025).

3. Government of Canada, “Customs Notice 25-10: United States
Surtax Order (2025-1)” (Last Modified 2 May
2025).

4. Government of Canada, “Customs Notice 25-11: United States
Surtax order (Steel and Aluminum 2025)” (Last Modified 2
May 2025).

5. Government of Canada, “Customs Notice 25-15: United States
Surtax Order (Motor Vehicles 2025)” (Last Modified 2 May
2025).

6. We have been regularly reporting on critical
tariff-related updates. See our previous publications: All Things Tariffs: A Comprehensive
Overview of Where We Stand Today; The Pause on the Tariff War: How
Businesses Can Use the Reprieve Wisely; Preparing for Potential US Tariffs:
Key Dates and Strategic Considerations.

7. Government of Canada, Customs Notice 25-17 : United
States Surtax Remission Order (Motor Vehicles 2025) (Last
Updated 20 May 2025);

8. Government of Canada, “Customs Notice 24-32: China Surtax
Order (2024) – Electric Vehicles” (Last Updated 11
December 2024); Government of Canada, “Customs
Notice 24-26: China Surtax Order (2024) – Steel and
Aluminum” (Last Updated 11 December 2024).

9. While referred to as GST “exemption” codes,
they generally apply to imported products, the supply of which
would be zero-rated (taxed at 0%), rather than exempt (non-taxable)
supplies. There are also special circumstances in which GST (or HST
as applicable) could be relieved, such as goods returned to Canada
on which GST/HST previously paid. The specific relieving provisions
can be quite technical and have multiple conditions or criteria to
satisfy.

The foregoing provides only an overview and does not
constitute legal advice. Readers are cautioned against making any
decisions based on this material alone. Rather, specific legal
advice should be obtained.

© McMillan LLP 2025