U.S.-Taiwan Section 232 Deal: What Canadian Importers Should Watch

Key Takeaways

• The 15% U.S. Section 232 rate on select Taiwan-origin auto and aircraft parts does not apply to Canadian importers, but it shifts North American supplier pricing.
• Canadian importers using CUSMA preference should verify whether U.S. Tier-1 suppliers have switched sourcing or started using Taiwan-origin inputs that affect regional value content.
• Watch for HS 6-digit re-classification requests from suppliers claiming Taiwan-origin parts now enter the U.S. as finished goods to avoid 232 charges.
• If you import directly from Taiwan, duty rates remain unchanged under Canada’s MFN schedule, but your U.S. customers may ask you to re-route shipments or adjust pricing to match their new landed cost.

Why a U.S.-Taiwan tariff deal matters to Canadian importers

The United States and Taiwan finalized a narrow agreement in January 2025 that sets a 15% Section 232 tariff on select auto parts, wood products, and aircraft components entering the U.S. from Taiwan. The deal replaces the blanket 25% steel and 10% aluminum tariffs that would otherwise apply under U.S. Section 232 national-security rules.

Canadian importers do not pay U.S. tariffs. But if you buy from U.S. Tier-1 auto suppliers, aerospace fabricators, or wood mills that source inputs from Taiwan, you need to watch three things: supplier price changes, CUSMA origin content calculations, and HS classification drift.

What changed on the U.S. side

The U.S. framework applies a flat 15% rate to Taiwan-origin goods in three categories:

• HS 8708 (motor vehicle parts)
• HS 4407, 4408, 4409 (sawn, profiled, and continuously shaped wood)
• HS 8803 (aircraft and spacecraft parts)

The 15% rate is lower than the 25% steel or 10% aluminum Section 232 tariff, so U.S. importers of Taiwan-made brake rotors, engine mounts, landing-gear fittings, and furniture-grade lumber now have a predictable duty rate instead of case-by-case exclusion requests.

For Canadian importers, the question is not whether you pay the 15%. You don’t. The question is whether your U.S. suppliers will switch sourcing to Taiwan to take advantage of the lower U.S. rate, and whether that switch breaks your CUSMA regional value content.

CUSMA RVC and the 75% auto threshold

If you import auto parts from a U.S. supplier and claim CUSMA preference, you must meet the 75% regional value content threshold under CUSMA Annex 4-B. The calculation counts only North American (Canada, U.S., Mexico) content as originating.

When a U.S. supplier substitutes a Taiwan-made brake caliper for a U.S.-made one to save on the new 15% U.S. duty, the Taiwan component counts as non-originating content in your RVC worksheet. If that substitution drops your part below 75%, you lose CUSMA preference and pay Canada’s MFN duty rate when you file your Commercial Accounting Declaration.

CBSA does not automatically know your supplier changed sourcing. But if CBSA issues a CUSMA origin verification under Article 5.9, you will need a supplier certification showing net-cost or transaction-value RVC. If the certification no longer supports 75%, CBSA will assess MFN duty retroactively, plus interest, and you may face an AMPS penalty if the original claim was filed without reasonable care.

Steel and aluminum purchase requirements

CUSMA Chapter 4 also requires that 70% of the steel and aluminum used in automotive goods be melted and poured in North America. If your U.S. supplier now buys Taiwan-origin steel billet or aluminum extrusion to sidestep the U.S. Section 232 charge, that material does not count toward the 70% threshold.

We routinely see importers assume that a “Made in USA” stamp on the supplier invoice satisfies CUSMA origin. It does not. CBSA can request mill-test certificates, purchase invoices, and melt origin documentation under D11-4-2. If the steel or aluminum fails the 70% rule, the entire part loses CUSMA preference.

HS classification pressure

The U.S.-Taiwan framework applies only to specific HS 6-digit codes. U.S. importers have an incentive to re-classify Taiwan-origin parts into adjacent headings that are not subject to the 15% rate.

Example: a Taiwan-made wiring harness might be classified under HS 8544.30 (ignition wiring sets) instead of HS 8708.99 (other auto parts) if the U.S. importer argues it is sold as a standalone electrical product. The HS 8544 classification avoids the 15% Section 232 charge.

If your U.S. supplier asks you to accept a new HS code on the commercial invoice, do not copy it blindly into your CAD filing. Canadian HS classification follows the Canadian Customs Tariff and CBSA interpretation. A misclassification that understates duty or claims incorrect CUSMA preference can trigger a post-release verification, duty assessment, and Level 2 or Level 3 AMPS penalty.

Before you change the tariff code on your next entry, run the description through HS classification review or talk to your broker. CBSA does not accept “the U.S. supplier told us to use this code” as due diligence.

What to do if your supplier notifies you of a sourcing change

If a U.S. or Taiwan supplier tells you they are shifting production, opening a new plant, or changing the country of origin on the commercial invoice, send the notice to your broker before the next shipment arrives.

We need three things:

1. New supplier certification showing CUSMA RVC and steel/aluminum origin if you are claiming preference.
2. Updated HS classification review to confirm the Canadian tariff code has not changed.
3. RPP bond check to confirm your release-prior-to-payment security still covers the revised duty and tax liability.

If you wait until after CBSA releases the goods and then discover the RVC no longer qualifies, you will file a voluntary correction through the CARM Client Portal, pay the MFN duty difference, post additional bond security, and lose two to three weeks of working capital while the amendment clears.

Taiwan direct imports into Canada

If you import auto parts, wood, or aerospace components directly from Taiwan into Canada, the U.S.-Taiwan deal does not change your duty rate. Taiwan goods enter Canada under MFN rates unless they qualify for CPTPP preference (Taiwan is not a CPTPP member, so they do not).

What may change is your pricing negotiation. If your Taiwan supplier now has a 15% tariff advantage selling into the U.S. market, they may raise FOB prices or redirect capacity to U.S. customers. Canadian importers competing for the same production slots should expect tighter lead times and less willingness to hold Canadian-spec inventory at bonded warehouse facilities.

Air-cargo routing and transshipment risk

Some Taiwan exporters ship auto and aerospace parts through Hong Kong or South Korea to consolidate air freight. If the commercial invoice shows Taiwan origin but the airway bill shows Hong Kong as the export country, CBSA may flag the shipment for origin verification.

Under CUSMA and CPTPP rules, transshipment through a non-party country is allowed only if the goods do not undergo further production and remain under customs control. If CBSA suspects the Taiwan parts were re-labeled or re-packaged in Hong Kong to evade the U.S. Section 232 tariff, the shipment will sit in exam until you provide warehouse receipts, customs transit bonds, and proof the goods were not altered.

PARS or RMD release times assume clean documentation. An origin hold adds two to four business days and ties up your RPP bond limit. If your freight forwarder consolidates Taiwan cargo through a third country, make sure the master airway bill and house bill both show Taiwan as origin and include a non-manipulation certificate.

Closing

The U.S.-Taiwan Section 232 framework is a U.S. trade measure, not a Canadian one. But any time a major supplier market gets a new tariff structure, North American supply chains adjust. If you import auto parts, wood, or aircraft components from U.S. or Taiwan sources, review your CUSMA certifications, check your HS classification, and confirm your RPP bond sizing still covers worst-case duty if CBSA denies preference. We run those checks daily. Get in touch if your supplier just sent you a sourcing-change notice and you want a second set of eyes before the next entry.

Frequently Asked Questions

Does the new U.S.-Taiwan 15% tariff apply to Canadian importers?

No. The Section 232 steel and aluminum tariffs are a U.S. measure under U.S. trade law. Canadian importers filing a CAD through the CBSA follow Canada’s MFN schedule and any applicable FTA preferential rates (CUSMA, CETA, CPTPP). The 15% rate applies only to entries into the United States.

How does this affect CUSMA origin claims on auto parts?

If a U.S. supplier switches to Taiwan-origin components to avoid the 15% U.S. Section 232 duty, the regional value content calculation for CUSMA may drop below the 75% auto threshold required by Annex 4-B. CBSA can request origin verification under CUSMA Article 5.9, and you’ll need a supplier certification showing net-cost method or transaction-value method RVC. Missing or incomplete certification triggers MFN duty retroactively.

What HS codes are affected by the U.S.-Taiwan tariff?

The U.S. notice covers select headings in HS 8708 (auto parts), 4407-4409 (sawn and profiled wood), and 8803 (aircraft parts). Canadian importers should cross-check whether their U.S. customers or Taiwan suppliers are trying to re-classify parts into different 6-digit HS codes to sidestep the U.S. duty. Any change in supplier HS description should trigger a review of your own HS classification for CBSA CAD filing.

Can I still claim CUSMA preference if my supplier uses Taiwan-origin steel or aluminum?

You can, but the Taiwan-origin material counts as non-originating content. For automotive goods under CUSMA Chapter 4, you must meet the 75% RVC and steel-and-aluminum purchase requirement (70% melted-and-poured in North America). If the Taiwan steel pushes your RVC below 75% or violates the steel-purchase rule, you lose CUSMA preference and pay MFN duty.

How quickly does CBSA verify a CUSMA origin claim?

CBSA can issue a verification letter under CUSMA Article 5.9 within 30 days of release. Per CBSA D11-4-2, you have 30 days to respond with supplier certifications, RVC worksheets, and purchase invoices. Failure to respond in 30 days triggers denial of preference and duty assessment at MFN rate plus interest.

Should I notify my customs broker if my U.S. supplier changes sourcing?

Yes. Any supplier notice of a new plant, new country of origin, or re-classified HS code should go to your broker before the next shipment. We re-run the HS classification, check whether CUSMA RVC still qualifies, and update the CAD coding. Waiting until after release means you file a voluntary correction under CARM and potentially post additional RPP bond security.

Does this affect CETA or CPTPP origin for Taiwan goods?

Canada does not have an FTA with Taiwan. Taiwan-origin goods enter Canada under MFN rates unless they are substantially transformed in a CETA (EU) or CPTPP (Japan, Vietnam, etc.) member country. The U.S.-Taiwan Section 232 deal does not change Canada’s treaty network.

Source: Supply Chain Dive