Tariff Rate Restored for EHTPs

Summary#

The federal government registered the Order Amending the Schedule to the Customs Tariff, 2022-2 on March 9, 2023 to fix an unintended increase in customs duty on some electronically heated tobacco products (EHTPs). The order restores the intended most-favoured-nation duty from 13% back to 9.5% and lets affected importers seek refunds for overpaid duties dating back to January 1, 2022.

What it does#

• Removes the incorrect tariff entry that caused the higher duty and adds two new tariff items to the Schedule to the Customs Tariff so rates match what was intended before the Harmonized System update.
• Restores the MFN duty rate for the EHTP line from 13% to 9.5% (the item in the Schedule that should carry 9.5%).
• Creates a remission mechanism (the Electronic Heated Tobacco Products Remission Order) so importers who paid the higher rate from January 1, 2022 until the Amending Order’s registration can apply for a refund of the difference.
• Sets out transitional preferential tariff steps (labelled CPTPT in the schedule) for the new tariff items with staged reductions:
  • For one tariff item: January 1, 2023, January 1, 2024, January 1, 2025, January 1, 2026, January 1, 2027 (rates step down to free by January 1, 2027).
  • For the other tariff item: January 1, 2023, January 1, 2024, January 1, 2025, January 1, 2026 (rates step down to free by January 1, 2026).

Who's affected#

• Importers of electronically heated tobacco products (EHTPs). The Canada Border Services Agency (CBSA) reported that one importer is affected by the tariff-rate issue identified so far.
• The CBSA will implement the changes and process any remission (refund) claims.
• The Department of Finance and other government trade units are involved in the correction. The government says the importers at issue are large businesses; small businesses are not expected to be affected.

Why it matters#

• The change corrects an accidental tariff increase so importers are not charged a higher duty than intended.
• The government estimates the total overpaid duty since the error began is about $25,000; the remission order lets importers recover that amount (subject to CBSA claim procedures).
• Fixing the Schedule keeps Canada’s tariff listings aligned with the international Harmonized System update (HS 2022) while preserving the expected revenue-neutral outcome.
• For consumers, this is mainly an import-trade technical fix; for the importer(s) involved it means potential refunds and lower future duty costs.