A new 50% U.S. tariff on selected imported Canadian goods has taken effect, adding costs for lubricant manufacturers, according to the Independent Lubricant Manufacturers Association.
The tariff is the latest development in deteriorating U.S.-Canada trade relations. President Donald Trump imposed the additional 50% duties after the U.S. administration accused Canada of discriminatory treatment of American exports. Section 338 of the U.S. Tariff Act allows the president to impose duties of up to 50% where a foreign country is deemed to have imposed an unequal burden or discrimination on U.S. commerce.
From Aug. 22, the tariff applies to specified Canadian-origin goods classified under HTSUS 3811.21.00. Not every Canadian additive faces the tariff. HTSUS 3811.21.00 applies only to products containing petroleum oil or bituminous-mineral oil as the liquid carrier. Additives without a petroleum-oil base fall under other categories, such as 3811.29.00, and aren’t subject to additional cost for U.S. buyers.
The U.S. is Canada’s main export market for refined products, and companies in both countries have customers on either side of the border. However, the new tariff adds a significant cost to certain Canadian additives entering the U.S., while U.S. additive manufacturers continue to have substantial access to the Canadian market.
ILMA has warned that the tariff will particularly affect U.S. blenders using imported Canadian detergent and dispersant additive packages, listed under 3811.29.00.
“These are not finished consumer products,” ILMA said in a statement, describing the products in question as manufacturing inputs incorporated into lubricants and greases produced at U.S. facilities.
Manufacturers cannot necessarily switch to another additive package if Canadian supplies become uneconomic, the association said. Lubricant formulations often have to meet engine oil performance categories, original equipment manufacturer specifications and individual customer requirements. Changing an additive package can require reformulation, laboratory and field testing and customer approval, which can take months or longer for some applications.
ILMA said the impact could be particularly difficult for independent lubricant manufacturers already dealing with higher base-oil costs, supply constraints and tighter supplier credit.
The association had asked the administration to remove 3811.21.00 from the tariff action. Alternatively, it sought a 180-day suspension to give manufacturers time to assess domestic availability, reformulation requirements and qualification timelines.
The U.S. imported $513.7 million of products classified under 3811.21 in 2024, according to United Nations Comtrade data compiled by the World Bank. Canada supplied $63 million, representing about 12.3% of total U.S. imports in the category and roughly 15.5 million kilograms of product. The U.S. exported $234.8 million of products in the category to Canada in 2024, equivalent to 43.2 million kg and almost four times the value of Canadian exports to the U.S.
At a 50% tariff rate, a similar annual flow would represent about $31.5 million in additional duties before any costs are absorbed by suppliers or passed through the supply chain.
The measures cover about $27.6 billion of Canadian goods. Canada has responded with matching tariffs on a dollar-for-dollar basis, with counter-tariffs of 15%, 25% and 50% scheduled to take effect Sept. 8 on selected U.S. products.
According to one industry consultant, it is unlikely that blenders in the U.S. would be affected by price hikes on imported Canadian additives.