U.S. President Donald Trump imposed a 35% tariff on Canadian goods and maintained a 25% tariff on Mexican goods, but a critical exemption under the 2020 United States-Mexico-Canada Agreement (USMCA) ensures most exports from both countries remain duty-free.

Canada’s central bank reports that 100% of energy exports and 95% of other exports comply with USMCA rules, with nearly 90% of Canadian goods entering the U.S. tariff-free in April. Mexico’s Economy Secretary Marcelo Ebrard noted that over 84% of its U.S. trade avoids tariffs under the agreement.

Canadian Prime Minister Mark Carney emphasized that the U.S.’s commitment to USMCA keeps Canada’s average tariff rate low, with over 85% of Canada-U.S. trade unaffected. Mexico’s President Claudia Sheinbaum echoed this, stating Mexico’s strong position due to the trade pact.

However, Trump’s 50% tariffs on steel and aluminum and 25% on autos impact specific sectors, though Canadian and Mexican cars are exempt. Former Canadian minister John Manley highlighted the economy’s resilience but warned that losing USMCA in its 2026 review could be catastrophic, given that 75% of Canada’s exports and 80% of Mexico’s go to the U.S.

Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association, noted that USMCA’s protections give Canada an edge over other trading partners. Still, Carney cautioned that industries like autos, steel, and pharmaceuticals face challenges from targeted tariffs.

With the U.S. market critical for both nations, the looming USMCA renegotiation raises concerns about future trade stability and economic investment.

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