The Canada-United States-Mexico Agreement appears to be offering some protection against the sweeping and punitive shift in U.S. trade policy. Over the past few months, Trump singled Canada out for criticism over its treatment of U.S. imports including lumber and dairy, threatening “retaliatory” tariffs, but he has also backed away from some of this rhetoric as products covered under the three-way North American trade pact adopted in 2020 were exempted.
Clifford Sosnow, a partner in the international trade and investment group at Fasken Martineau DuMoulin LLP, said Trump’s latest order has the effect of “safeguarding” the CUSMA trade agreement “and giving it special treatment in certain circumstances, with the notable exception of steel and aluminum.”
For now, Canada remains subject to the 25 per cent fentanyl/illegal immigration tariff, along with 10 per on energy and potash, with carve outs for CUSMA compliant goods.
TD’s note said around 40 per cent of the dollar value of goods travelling across the border are declared CUSMA compliant, but added that the figure could climb with the incentive of avoiding tariffs.
“It’s estimated that 80 to 90 per cent of the value of exports could become CUSMA compliant,” the analysts wrote.
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While no new tariffs were imposed on the two countries, the order Trump signed Wednesday contemplated the possibility of the justification being terminated or suspended, which would trigger a new 12 per cent levy.
U.S. President Donald Trump’s sweeping reciprocal tariff plan comes with a “fallback” for free trade partners Canada and Mexico if a national emergency declaration on border controls and fentanyl used in February to justify 25 per cent tariffs on them doesn’t hold up.
Clifford Sosnow, a partner in the international trade and investment group at Fasken Martineau DuMoulin LLP, said Trump’s latest order has the effect of “safeguarding” the CUSMA trade agreement “and giving it special treatment in certain circumstances, with the notable exception of steel and aluminum.”
For now, Canada remains subject to the 25 per cent fentanyl/illegal immigration tariff, along with 10 per on energy and potash, with carve outs for CUSMA compliant goods.
TD’s note said around 40 per cent of the dollar value of goods travelling across the border are declared CUSMA compliant, but added that the figure could climb with the incentive of avoiding tariffs.
“It’s estimated that 80 to 90 per cent of the value of exports could become CUSMA compliant,” the analysts wrote.
Trump's tariff plan includes a ‘fallback’ in case fentanyl justification falters — Financial Post
The U.S. administration may opt to reduce tariffs on Canada to the 12% level
U.S. President Donald Trump’s sweeping reciprocal tariff plan comes with a “fallback” for free trade partners Canada and Mexico if a national emergency declaration on border controls and fentanyl used in February to justify 25 per cent tariffs on them doesn’t hold up.
from the president and his top officials about the administration’s willingness to negotiate with trading partners, with a 10% levy on all countries already in effect and targeted reciprocal import taxes set for Wednesday. That uncertainty has fueled volatility in global markets and sent foreign leaders frustrated by Trump’s approach rushing to secure deals with the US.
