By Michelle Chai

In Part I of this series, we discussed the industries and goods eligible for remission.  In Parts II and III, we attempt to provide a framework for importers who will be making remission submissions.

Update: An earlier version of this article was published before an updated Customs Notice from the Canada Border Services Agency (CBSA) was released May 20, 2025. As has been the case the last few months, the landscape under which importers operate is constantly changing, and below is our updated commentary on this topic.

Remission applications

After assuring themselves they or their goods are eligible for remission, importers seeking relief via the remission process from tariffs on goods imported from the U.S. should then review the remission guidelines and template for submissions published by the Department of Finance Canada (the “Guidelines”).

Remission can be requested before or after importation, up to two years after the date of importation.

The Guidelines state that remission of tariffs will be considered in the following circumstances:

1. To address situations where goods used as inputs cannot be sourced domestically, either on a national or regional basis, or reasonably from non-U.S. sources; or,

2. To address, on a case-by-case basis, other exceptional circumstances that could have severe adverse impacts on the Canadian economy

The Department of Finance Canada has indicated it will only consider remission where “it is required to address exceptional and compelling circumstances that, from a public policy perspective, are found to outweigh the primary rationale behind the application of the tariffs”.

The Guidelines then set out 14 headings of the type of information required to be submitted with each remission submission, including:

• Outline of the importer’s operations and detailed description of the goods;
• Evidence demonstrating inability to source the product, or substitutes, from Canadian or non-U.S. suppliers;
• Evidence that contractual obligations or other factors prevent sourcing the product, or substitutes, from Canadian suppliers or from other non-U.S. suppliers;
• Information on whether the inability to source the product, or substitutes, from Canadian suppliers or from other non-U.S. suppliers is temporary or transitional;
• Cost of manufacturing, unit selling price, and information on the effect of the remission on the product’s cost and price;
• Information on the effect of remission on employment, volume of production, investment, or other relevant aspects of operations;
• Names and locations of Canadian competitors, with information on how the remission may affect those companies; and
• The exceptional circumstances that merit consideration of the application.

While the Guidelines provide a useful framework for applicants, they contain terminology that applicants may find vague or uninformative.  For example, what is the threshold for when a good cannot be “reasonably” procured from a non-U.S. source? What constitutes “exceptional circumstances that could have adverse impacts on the Canadian economy”? What are “compelling circumstances that, from a public policy perspective, are found to outweigh the primary rationale behind the application of the tariffs”? We will be tackling the first of these questions below, and the others in Part III of this series.

Availability from non-U.S. sources

This commentary is based on caselaw which was decided before the current trade uncertainties.  We have considered caselaw in the remission context which discusses these terms in an effort to provide guidance to eligible importers making their own submissions for remission. 

The Guidelines state that remission may be available in situations where goods used as inputs cannot be sourced domestically, either on a national or regional basis, or reasonably from non-U.S. sources.

The previous version of the Customs Tariff, in force from 1985 until 1997, could be informative for how the Minister might determine whether an imported good cannot be sourced domestically, or reasonably from non-U.S. sources.

Under the old Customs Tariff, the criteria for when a piece of equipment was not available in Canada were set out in s. 76(3) as follows:

(a) whether a manufacturer has, within his normal operational framework, the full range of technical and physical capabilities necessary for production in Canada of machinery and equipment reasonably equivalent to the relevant machinery and equipment; and

(b) whether a Canadian manufacturer has so produced machinery and equipment as to demonstrate a production competence reasonably equivalent to that required to produce the relevant machinery and equipment.

Similar to the current remission framework, this section required the Minister to form an opinion on whether the criteria above were satisfied. If they were not, and the imported piece of machinery or equipment were deemed to be “not available from production in Canada”, then the Minister could remit the duties and taxes applicable to that particular piece of equipment or machinery,

This provision was discussed in Emerson Electric Canada Ltd. v. Minister of National Revenue, 1997 Carswell Nat [Emerson]. In Emerson, the appellant importer, Emerson Electric Canada Ltd., had been granted remission for a variety of woodworking products sold under the “Craftsman” brand name, which were later revoked once the Minister learned that reasonably equivalent products were being manufactured by a Canadian company, General MFG.

The appellant argued that there were differences between the imported products and those available for local manufacture – in particular in size, horsepower, weight, price, and target market of the goods.

The Federal Court held that even if the products were not exactly equivalent, it remained open to the Minister to conclude that the appellant’s imports were “available from production in Canada” if he was satisfied that General MFG was in a position to produce reasonably equivalent products.

Based on the decision in Emerson, applicants for remission should not automatically assume that they satisfy the criteria to provide evidence of an “inability to source the product, or substitutes, from Canadian or non-U.S. suppliers”, simply because an imported product has no non-U.S. counterpart of its exact specification. Rather, Emerson suggests that the availability of a reasonably similar product to the product subject to remission, coupled with the manufacturer’s ability to make a product of the same exact specification, could be considered sufficient for the Minster to determine that the good is reasonably available from a Canadian or non-U.S. source.

We note that Emerson dealt with finished products, or “output goods”, whereas the Guidelines contemplate remission for “input goods”, i.e. component parts used in the manufacture of output goods. It is unclear what difference, if any, that would have on the Minister’s determination.

Key takeaway:  The Department of Finance will consider whether goods can be sourced from non-U.S. suppliers, paying particular attention to whether there is adequate domestic production.

We continue our discussion of potential guidance to importers on what some of the terminology used by the Department of Finance Canada might mean, and the appeal process, in Part III of this series.