Facts verified on July 7, 2026, against the Canada Gazette, CBSA, Department of Finance, and Justice Laws sources cited in this guide.
If you’re importing a vehicle from the United States into Canada in 2026, the short answer is: yes, the 25% surtax may still apply. The surtax remains in force under the United States Surtax Order (Motor Vehicles 2025), effective April 9, 2025, and it applies to many new and used US-origin passenger vehicles and light trucks. It is charged in addition to GST and any applicable customs duty, not instead of them.
The two questions that determine your cost are straightforward:
- Was the vehicle built in the United States?
- Does it qualify as a CUSMA-originating vehicle with documented Canadian or Mexican content?
Those answers determine whether the surtax applies to the full vehicle value, to only part of the value, or not at all.
The United States Surtax Order (Motor Vehicles 2025) Remains in Force
Canada imposed the vehicle surtax under section 53(2) of the Customs Tariff through SOR/2025-118, the United States Surtax Order (Motor Vehicles 2025). The measure was introduced as a reciprocal response to US Section 232 automotive tariffs and took effect on April 9, 2025.
Although Canada removed many other counter-tariffs on September 1, 2025, the measures affecting motor vehicles, steel, and aluminium remained in place. As of July 2026, the vehicle surtax is still active.
One important development is that the July 1, 2026 CUSMA review deadline passed without an extension agreement. CUSMA remains in force, but it now moves into an annual review cycle until its scheduled 2036 expiry. The surtax itself can still be amended, suspended, or repealed by a future Order in Council, so importers should verify the current status before purchasing a vehicle.
Vehicle Origin Determines the Surtax, Not Where You Buy
This is the rule that surprises most buyers.
The surtax is based on where the vehicle was built, not where it was purchased. A car bought from a dealer in Texas, Florida, or New York is not automatically a US-origin vehicle. CBSA determines origin using the Determination of Country of Origin for Marking Goods (CUSMA Countries) Regulations.
A practical first check is the VIN’s first character:
| VIN First Character | Likely Country of Manufacture |
|---|---|
| 1, 4, 5 | United States |
| 2 | Canada |
| 3 | Mexico |
| J | Japan |
| W | Germany |
| K | Korea |
For example:
- A Toyota built in Kentucky (VIN begins with 1, 4, or 5) is treated as a US-origin vehicle and may be subject to the surtax.
- A BMW built in Germany and sold by a US dealer is not a US-origin vehicle and does not attract the 25% surtax.
- A Ford built in Ontario (VIN begins with 2) is treated as Canadian-origin and is not subject to the surtax.
The burden of proving origin rests with the importer. If CBSA requests evidence, you may need manufacturing records, VIN decoding information, or other supporting documentation.
The Surtax Calculation Depends on CUSMA Compliance
Once CBSA determines that a vehicle is US-origin, the next question is whether it qualifies as a CUSMA-originating vehicle.
There are two very different calculations.
Scenario 1: US Vehicle That Does Not Qualify Under CUSMA
For a non-CUSMA US vehicle:
- The 25% surtax applies to the full value for duty.
- The normal 6.1% MFN customs duty also applies.
- GST is then calculated on top of both amounts.
Scenario 2: US Vehicle That Qualifies Under CUSMA
For a CUSMA-compliant vehicle, the rule is more favourable.
The surtax applies only to the portion of the vehicle’s value that is not Canadian or Mexican content. Under the Order, Canadian and Mexican content is deemed to be 15% unless the importer provides documentary evidence showing a higher percentage. The customs duty rate is 0% under CUSMA.
This is why the deemed 15% rule matters so much. Some online guides describe it backwards. The Order does not assume 85% Canadian/Mexican content. It assumes only 15% unless you prove otherwise.
If you can document a higher Canadian or Mexican content percentage using records that satisfy the CUSMA Rules of Origin Regulations, the surtax base can be reduced further. CBSA has the authority to verify those records and revert to the default 15% assumption if adequate documentation is not provided.
Vehicles and Situations Exempt From the Surtax
Not every vehicle crossing the border is subject to the 25% charge.
Under CBSA Customs Notice 25-15, many goods classified under Chapter 98 and Chapter 99 remain exempt if they are not specifically listed in Schedule 2 of the Order. Important examples include:
- Temporary imports by visitors.
- Traveller provisions that qualify under Chapter 98.
- Settlers’ effects vehicles imported by people moving permanently to Canada under tariff item 9807.00.00.
Several vehicle classifications are also excluded by tariff code, including:
- 8703.10 snow vehicles and golf cars.
- 8703.21 vehicles with engines of 1,000 cc or less.
- 8704.60.00 trucks over 5 tonnes GVW.
One important caution: Schedule 2 specifically claws back certain Chapter 98 items, including 9804.30.00, 9825, 9826, and 9897 to 9899. Importers should confirm that their exemption actually survives the Schedule 2 exclusions before relying on it.
The Remission Orders Cover Automakers, Not Individual Importers
Since the surtax was introduced, many importers have heard about various Canadian remission orders and assumed they could reduce or eliminate the 25% charge on their personal vehicle imports.
In most cases, that assumption is incorrect.
Canada introduced several remission orders during 2025 to support domestic vehicle production and supply chains. These measures were designed primarily for vehicle manufacturers and commercial importers, not individual consumers purchasing a single vehicle from the United States.
Examples include relief for manufacturers importing vehicles for Canadian assembly operations or companies meeting specific production and investment commitments. These remission programs generally involve strict eligibility criteria, reporting obligations, and government approval.
For private buyers importing a personal vehicle, these remission orders typically do not apply.
This distinction is important because many online discussions incorrectly suggest that “the surtax has been removed” or that “certain importers no longer pay it.” In reality, those statements usually refer to manufacturer-specific remission programs rather than a broad repeal of the surtax.
Unless your import qualifies under a published exemption or remission order, you should budget for the full amount of any applicable surtax before completing the purchase.
The 25% surtax often receives the most attention, but it is only one component of the total landed cost.
When importing a vehicle into Canada, you should consider every charge that may apply from the moment the vehicle crosses the border until it is registered in your province.
Typical costs include:
- Customs duty (where applicable)
- 25% surtax (if applicable)
- 5% GST
- Provincial sales tax, HST, or QST at registration
- Registrar of Imported Vehicles (RIV) fee for eligible newer vehicles
- Air conditioning excise tax
- Transportation and freight costs
- Customs brokerage fees
- Vehicle inspections
- Provincial registration fees
- Insurance before registration
For vehicles less than 15 years old, importers must also account for the costs associated with the Registrar of Imported Vehicles (RIV) program, including inspections and any modifications required to comply with Canadian Motor Vehicle Safety Standards (CMVSS).
Older vehicles that qualify for the 15-year exemption avoid these compliance costs, although they remain subject to customs clearance and applicable taxes.
Many buyers focus exclusively on the advertised purchase price when comparing vehicles in the United States. However, the true financial comparison should always be based on the landed cost, the total amount paid before the vehicle is legally registered and driven in Canada.
What Happens Next: CUSMA Annual Reviews
The long-term future of North American automotive trade continues to evolve.
CUSMA entered its first mandatory joint review period in 2026. While the agreement remains in force, Canada, the United States, and Mexico will now conduct scheduled annual reviews leading up to the agreement’s sunset mechanism in 2036 unless all parties agree to extend it.
For importers, the practical takeaway is that the current surtax rules remain in effect until the Canadian government formally changes or repeals them.
Trade policy can change quickly, particularly in response to negotiations involving automotive manufacturing, steel, aluminium, and broader North American trade relations. Importers planning a high-value purchase should therefore verify the latest CBSA guidance immediately before shipping rather than relying on articles or forum discussions published months earlier.
As customs brokers, we’ve seen buyers postpone purchases based on inaccurate online advice suggesting the surtax had already ended. A quick eligibility review before purchase often provides clarity and prevents unexpected costs at the border.
Should You Buy a Vehicle From the United States in 2026?
Despite the surtax, importing from the United States can still make financial sense in many situations.
Limited-production models, collector vehicles, specialty trucks, and luxury vehicles often remain significantly less expensive in the U.S. market than comparable Canadian inventory. Greater vehicle availability also gives buyers access to configurations and model years that may be difficult to source domestically.
The key is understanding the complete cost before committing to the purchase.
A customs broker can help you:
- Confirm the vehicle’s country of origin.
- Determine whether it qualifies under CUSMA.
- Calculate applicable surtax, customs duty, and GST.
- Review available exemptions or tariff treatments.
- Prepare customs documentation before the vehicle reaches the border.
- Minimize delays during CBSA clearance.
Knowing the complete landed cost before purchasing allows you to negotiate confidently and avoid surprises after the vehicle arrives in Canada.
Frequently Asked Questions
Does every US vehicle pay the 25% surtax?
No. The surtax applies only to vehicles covered by the United States Surtax Order (Motor Vehicles 2025). Origin, tariff classification, CUSMA eligibility, and any applicable exemptions or remission orders determine whether the surtax applies.
Is the surtax based on where I bought the vehicle?
No. The surtax depends on the country of origin, not where the vehicle was purchased. A German-built vehicle bought from a dealership in Texas is still treated as German-origin for customs purposes.
Does a CUSMA vehicle avoid the surtax?
Not necessarily. A CUSMA-originating vehicle generally benefits from 0% customs duty, but the 25% surtax may still apply to the US-content portion of the vehicle under the current surtax order.
Do classic cars automatically avoid the surtax?
No. Age alone does not determine surtax treatment. The applicable tariff classification, origin, and any available exemptions determine whether the surtax applies.
Has the Canadian vehicle surtax been repealed?
No. As of July 7, 2026, the United States Surtax Order (Motor Vehicles 2025) remains in force. Importers should verify the latest CBSA guidance before shipping because trade measures may change over time.
Disclaimer
This article is provided for informational purposes only and does not constitute legal, tax, or customs advice. Tariff measures, surtax orders, remission programs, customs duty rates, and CUSMA implementation may change. Before importing a vehicle into Canada, confirm the latest requirements with the Canada Border Services Agency (CBSA) or consult a licensed Canadian customs broker.
