How is country of origin decided for a Canadian surtax?

Which origin test does each Canadian surtax use?

Every Canadian surtax names its own origin test, and none of them is the test for a trade-agreement rate. The tests in force on November 11, 2026:

Two consequences follow. A good's country for the surtax can differ from the country on its CUSMA certificate. And the same good can be "from" one country for the US orders and another for the China order, because the two marking regulations ask different questions.

How does the CUSMA marking test work?

The CUSMA marking regulations apply a ladder. Section 4 says the country of origin is the country where the goods are wholly obtained or produced, produced exclusively from domestic materials, or where "each of the foreign materials incorporated into the goods undergoes an applicable change in tariff classification" set out in Schedule III. If that does not settle it, section 5 gives the goods the origin of "the single material that imparts the essential character", section 6 handles sets and mixtures, and section 7 falls back, in order, to the origin of the essential-character materials where the goods were produced by only minor processing, to the origin of the parts for a simple assembly of parts of one origin, and otherwise to "the last country in which the goods underwent production".

Four details decide most real cases:

• Section 13 lists operations that never count as a tariff shift, including a change "merely as the result of a change in the end use" and "the mere collection of parts so that the collection of parts is classified as if it were an assembled good pursuant to Rule 2(a)". Assembling a complete kit does not confer origin.
• "Minor processing" is defined in section 2: cleaning, coating, painting, trimming, testing, marking, sorting, repairs, and for apparel, printing, embroidery and other finishing operations. Minor processing alone does not move origin.
• De minimis. Section 11 disregards foreign materials that do not shift if they are no more than 7% of the value of the goods (by weight for Chapters 50 to 63; some food chapters are excluded).
• Section 9 sends Canadian goods processed in another CUSMA country to that country. If the regulations would make a good Canadian but it underwent production, other than minor processing, in the US or Mexico before import, its origin is "the last CUSMA country in which the goods underwent that production".

How does the China test differ?

The Non-CUSMA marking regulations have one rule. Section 3 says "the country of origin of goods is the country in which the goods were substantially manufactured." There is no tariff shift schedule and no de minimis. Section 1 of the China Surtax Order (2024) applies that section. Whether a given operation is substantial manufacture is a question of fact, which is why a ruling is worth having before relying on a processing step outside China.

For steel and aluminum, the melt-and-pour order then catches what the origin test lets through. SOR/2025-154 applies 25% to listed steel goods that contain steel "first produced in a liquid state ... and poured into its first solid state" in China, wherever the goods were later processed, and, since September 22, 2025, deems the steel Chinese if the importer cannot produce a certificate when an officer asks. It does not apply to US goods (s. 5(e)) or to goods already subject to the China order (s. 5(b)).

Five products through the test

Each case below gives the facts, the rule that decides it and the surtax result for a line released after September 8, 2026.

1. A wooden dining table made in the US with Chinese legs. A US maker machines the tops from US hardwood, buys finished wooden legs from China (9403.91.00, parts of wooden furniture) and assembles tables classified in 9403.60.10. Schedule III's rule for 9403.10 to 9403.89 is "a change ... from any subheading outside that group". The only foreign material, the legs, moves from 9403.91 into 9403.60, so the table is a US good. Tariff item 9403.60.10 is on Schedule 3 of the United States Surtax Order (2026): 50% surtax, code 26186C.

2. A Chinese flat-pack table assembled in the US. The same table arrives in the US from China as a complete kit in one carton, already classified as a table under Rule 2(a), and a US distributor assembles it. Section 13(e) says that collection of parts does not count as a tariff shift, and the kit and the table share a subheading anyway. Section 5 then gives the table the origin of the material that imparts its essential character, the Chinese-made table. It is not a US good, so no US surtax applies, even though it was shipped from the US by a US company. On an audit, a line that paid 50% here is an overpayment.

3. T-shirts sewn in the US from Chinese fabric, and Chinese T-shirts printed in the US. The Chapter 61 rule in Schedule III requires "substantial assembly", defined as sewing together all the major garment parts or six or more garment parts. T-shirts cut and sewn in the US from Chinese knitted fabric are US goods: 6109.10.00 is on Schedule 3, so 50%. Chinese blank T-shirts screen-printed in the US are not: printing is a finishing operation in the definition of minor processing, the shirt does not change classification, and section 5 leaves it Chinese. No US surtax, and no China surtax either, because the China order's remaining schedule covers steel and aluminum.

4. A refrigerator assembled in the US with a Mexican compressor, and a Korean refrigerator from a US distributor. Schedule III allows a change to 8418.10 through 8418.91 from any other subheading. A household refrigerator (8418.21.00) built in the US with a Mexican refrigeration compressor (8414.30.00) and US cabinet parts is a US good; 8418.21.00 is on Schedule 2, so 25%, code 26186B. A refrigerator made in Korea and sold to a Canadian retailer by a US distributor underwent no production in the US. It is a Korean good and pays no US surtax.

5. Canadian steel sections galvanized in the US and brought back. Steel sections of 7216.91.00 are on the schedule of the Steel Derivative Goods Surtax Order, which excludes only goods originating in Canada. Applying a metallic coating is minor processing, so section 9 does not move the origin, and the sections stay Canadian: no derivative surtax. Had the sections been cut and welded into a frame in the US, the frame would take US origin, and the US steel and aluminum order, which displaces the derivative surtax, would be the one to check.

A worked CAD line: products 1 and 2 side by side

The figures are illustrative and round. Ten dining tables, tariff item 9403.60.10, value for duty CAD 40,000, released on October 15, 2026, no CUSMA preference claimed. The Customs Tariff 2026, Chapter 94, lists 9403.60.10 at 9.5% MFN.

Same tariff item, same supplier address, same value: CAD 21,000 apart, all of it decided by the marking test. If the US-made tables do meet the CUSMA rule of origin and a UST claim is supported, the duty falls to zero and the surtax stays at CAD 20,000.

What records support a marking-origin position?

Customs Notice 26-23 says proof of origin "may be in the form of a commercial invoice or any other documentation" that contains the CUSMA minimum data elements, and it may be requested at any time. For a surtax position on mixed-origin goods, that is rarely enough on its own. Keep:

1. A bill of materials with the tariff classification and country of each material.
2. A description of the production steps in each country, enough to show which operations were minor processing and which were not.
3. The rule applied, by Schedule III heading for the CUSMA test, or the reasoning for substantial manufacture under the China test.
4. A certificate of where the steel was melted and poured (or the aluminum smelted and cast) for listed steel and aluminum goods: without one, produced when an officer asks, the melt-and-pour order deems the metal Chinese.
5. Any ruling. Customs Notice 26-23 says a binding advance ruling on marking can be requested for goods from a CUSMA country, and Customs Notice 26-17 points to national customs rulings for other goods. CBSA advance rulings and past entries covers how a ruling affects lines already filed.

How do you audit origin on past surtax lines?

1. Pull lines where the origin field and the supplier or ship-from country differ, and lines with US or Chinese suppliers on surtax-listed tariff items.
2. For each, ask the supplier where the goods were last produced and what went into them.
3. Apply the test the relevant order names, using the table above, and record the rule.
4. Recompute the surtax at the right order and rate, or none.
5. Correct or claim. A wrong origin declaration found to underpay triggers the 90-day correction duty in section 32.2 of the Customs Act; an overpayment is a refund adjustment within four years. The routes are in correcting a Canadian entry.

TariffSense reads CAD/B3 lines with the supplier and ship-from data on the invoice, flags surtax lines where the declared origin and the documents point to different countries, and lists the facts needed to settle the marking question on each one, in both directions. The post-entry audit page shows what goes in and what comes back. The surtax orders and how they combine are in why your CAD shows the wrong surtax, and the US schedules and rates in Canada's surtax on US goods and CUSMA. The CAD audit guide covers the rest of the line.

What should you do next?

Start with goods assembled in the US from imported parts, and goods made elsewhere but bought from US distributors: these are where the marking test and the invoice disagree most often, one way or the other. Write down the rule for each product family once, and apply it to every line. Confirm the reading with a licensed customs broker, or ask the CBSA for a ruling, before you file a correction.