The National Thoroughbred Racing Association (NTRA) released an advisory Friday regarding the tariffs imposed on Canada and Mexico, and how they affect the Thoroughbred industry. Please see below for further details.
Tariffs Announced, Stallions Part of Current Exceptions
President Trump recently announced sweeping tariffs on many countries, including Canada and Mexico. Collectively, these countries shipped roughly $931 billion worth of goods to the United States last year, accounting for 29% of all the goods the US imported, according to the United Nations Commodity Trade Statistics Database.
Effective immediately, all goods coming from Mexico and Canada are subject to a 25% tariff.
Please note that this is an extremely fluid situation, and talks between the countries are ongoing currently.
What is a Tariff?
A tariff is a tax on imported goods. In this case, it is a blanket 25% tariff on all goods. The importing company pays the tariff to the government imposing the levy.
Are There Exceptions?
Yes. A temporary exception has already been announced, with tariffs on goods that are United States–Mexico–Canada Agreement (USMCA) compliant being paused until April 2. Importantly, this includes live horses. For example – a horse born and raised in Canada is not subject to the 25% duty if entered into the country before April 2. As of now, they will be subjected to that duty after April 2, unless the administration extends or permanently incorporates the exception, or walks back the tariff.
What About After April 2?
After April 2, goods being imported to the United States will be subject to the 25% duty. However, there are many conditions in which horses can enter the United States for extended periods without paying duties. These include:
1) Temporary Entry: Horses can be admitted under bond for exportation within one year from the date of importation, which may be extended up to a total of three years
2) Duty-Free Status: Purebred breeding horses are classified under specific HTSUS subheadings 0101.21.0010 for males and 0101.21.0020 for females and have a duty-free status when imported permanently
3) Temporary Import for Racing/Shows: Horses from the US which have been exhibited at recognized expositions in Canada, including racing and horse shows, and have not been in Canada for more than 90 days, are eligible to return to the US without Canadian health certificates
As of now, Canada has not imposed reciprocal tariffs regarding Thoroughbreds. The Ministry of Agriculture and Agri-Food Canada has indicated that purebred breeding animals (including live horses) could be included in a second round of tariffs. Currently, a 21-day public comment period is underway for these proposed countermeasures, with feedback accepted until March 25, 2025.
The Canadian Thoroughbred Horse Society has issued a full advisory regarding the impending tariffs, which you can read here.
Tariff vs. Veterinary Requirements
1. One-year temporary entry:
1. Horses may be admitted without paying tariffs under bond for exportation within one year from the date of importation.
2. This period may be extended, upon application, for one or more further periods which, when added to the initial one year, shall not exceed a total of three years.
3. See HTSUS Chapter 98, subchapter 13 for more information here: Harmonized Tariff Schedule
2. 30-day temporary entry
1. This rule is for veterinary purposes, not tariffs.
2. Horses can be imported from Canada for up to 30 days without requiring a USDA veterinary port inspection or formal entry with U.S. Customs.
3. This is the standard temporary entry period for horses from Canada.
4. Horses must have an official Veterinary Health Certificate endorsed by a Canadian government veterinarian and a negative equine infectious anemia test.
Other Health Requirements: For stays longer than 30 days, horses will need an official health certificate of physical examination performed within 30 days of travel, endorsed by a Canadian government veterinarian, and a negative equine infectious anemia (EIA) test drawn within 180 days prior to export.
What Has Been The Response In Washington?
Almost immediately after the announcement, farm state lawmakers and members of the Agriculture Committee, including House Committee on Agriculture Chairman G.T. Thompson (R-PA), began pushing for agriculture exemptions to these tariffs, using the recently announced pause on tariffs for autos and auto parts as a precedent. This idea has also been seconded by Commerce Secretary Howard Lutnick.
While nothing has been finalized, Thompson is confident, saying, “I’m not bashful about weighing in with the White House. I got a great relationship with everyone, including the president.”
Lutnick also recently met with Ontario Premier Doug Ford in a meeting where the “temperature is being lowered” in the dispute. Ford and Lutnick have agreed to meet again, as negotiations are ongoing.
The NTRA and its team have been working closely with Congressman Andy Barr’s office, the Trump Administration, and officials in Canada to work on this issue.
What’s The Current Timeline?
March 13, 2025 – Currently, tariffs on goods, including horses, that are USMCA-compliant are paused.
March 25, 2025 – Public comment period for proposed Canadian countermeasure tariffs that likely include live horses ends. You can submit comments here: Consultations on Canada’s Response to United States Tariffs on Canadian Goods: Comment Submission Form
April 2, 2025 – The pause on tariffs that are USMCA-compliant ends.
What Can You Do?
A tariff on stallions would be a significant blow to the Thoroughbred industry. The best thing you can do is contact your local representative and tell them that any tariff that includes Thoroughbreds would be extremely detrimental to the industry. To find and contact your local representative, enter your zip code at this site: Find Your Representative | house.gov
Potential Scenarios:
1. Are Canadian horses brought into the U.S. before April 2 but sold later subject to the tariff?
No. Duties are assessed only upon importation—they are not retroactive. If a Canadian-bred horse was brought into the U.S. before April 2, it would not be subject to any duties because the normal tariff rate is “free” for the live horse classification, and the 25% duties on products of Canada did not apply to USMCA-compliant products.
2. What are the mechanics of how the tariff is collected? Is 25% of fair market value charged at the border crossing? Who appraises fair market value, and what happens if that horse sells a week after it crosses the border for four times the declared value at a sale?
What matters for customs valuation is the value declared to customs upon importation. If the owner of a horse imports the horse to the US, pays the duty on the declared value, and that horse later sells for four times the declared value, the owner generally would not be required to revise the declared value to customs because the sale occurred after entry and the entry was not made with a specific sale being contemplated.
Any duty is based on the declared value to US Customs. For example, if the declared (or entered) value is $400,000, and the duty is 25%, the duty to be paid to U.S. Customs is $100,000 upon entry.
More details:
The U.S. has a hierarchy of methods for appraising (valuing) imported merchandise. The default rule is the transaction value, which is the price actually paid or payable when sold for export to the United States.
Assuming the sale of a Canadian bred horse to a U.S. customer, the value declared to US Customs typically would be the sale price as reflected on the sales invoice.
In the situation in which an owner of a Canadian-bred horse imports the horse into the US for a show/race, the transaction value would not apply because there is no “sale.”
In the hierarchy of valuation methods, if transaction value is unavailable, then you can use the transaction value of similar merchandise. Arguably, the declared value could be based on the sale of a similar horse for export to the United States. But this option requires that the similar transaction be around the same time as the entry of the subject merchandise.
The catchall when no other methodology works to appraise imported merchandise, valuation will be based on the valuation methodologies reasonably adjusted as necessary to arrive at a value, with the caveat being that only information available in the United States will be used.
Ultimately, the importer must be ready to justify the value declared. Given the catchall, using the transaction value of a similar horse sold to the United States from another country would be appropriate. An independent appraisal of the horse may be acceptable, but would need to be based on the value of a sale of the horse to the United States.
3. What if a racehorse ships in from a Canadian track (after April 2) to run at a US race meet, wins in the US, and then sells at a sale after April 2 for $300,000? Who imposes the tariff, collects it, and who is responsible for paying it?
As noted, there is a U.S. tariff classification—9813.00.60—that covers animals and poultry brought into the United States for the purpose of breeding, exhibition or competition for prizes, and the usual equipment therefor. This classification is for temporary entry, not entry for consumption. The entry is made under temporary import bond, which is twice the value of the duties that would be owed if entered for consumption, and must be exported within 1 year from the temporary entry. There is an important restriction, an importer cannot convert to an entry for consumption. The merchandise entered under temporary bond must be exported. If it is not, and proof is not provided to the US Customs, liquidated damages will be assessed, which is the amount of the temporary import bond.
If not brought in under temporary import bond, the duty will need to be paid based on the entered value at the time of importation. The importer of record is always responsible for payment to the government of the import duties. U.S. Customs collects the duties owed under the harmonized tariff schedule of the United States. So, if a good from Canada is subject to the 25% duty upon entry for consumption into the U.S., the importer must pay that 25% duty to U.S. Customs.
In the offered example, the fact that the horse sold after import for $300,000 does not impact the declared value given that the horse was imported not for a specific sale, but for an event. The value declared to U.S. Customs is the value of the horse upon entry.
4. Digital/remote sales are getting more popular. Is the digital/remote sale of a Canadian horse through an American auction house subject even if the buyer lives in another country? Does it depend on which country the buyer is from and where is the horse is shipped?
Duty assessment is based on entry for consumption into the United States. If a Canadian horse is sold through an online auction, but is not imported into the U.S., but instead Spain, then there are no duties owed to the U.S. because there will have been no importation into the U.S. of the merchandise.
Assume the horse is sold through a digital auction to a Mexican purchaser. The merchandise would go through the U.S, but U.S. duties could be avoided because the horse is not being entered into the U.S. for consumption in the U.S. In this scenario, the horse would travel in bond to Mexico. Brokers/freight forwarders are familiar with this process and the entry document would specify that this is not a Type 01 entry (entry for consumption) but instead moved as a Type 06 (transportation and export).
Please refer to the NTRA website for further updates.
