United States President Trump advocates for ending financial aid to Canada amid ongoing trade negotiations.
Updated Article:
Hey there! Let's dive into the latest news on the US-Canada trade relationship under the USMCA (Canada-United States-Mexico Agreement).
New U.S. Tariffs Ruffle Feathers in Canada
In March 2025, the US slapped tariffs of up to 25% on most imports from Canada, and a 10% tariff on energy products like oil, gas, and electricity. These measures, sanctioned under the International Emergency Economic Powers Act (IEEPA), initially affected all imports – regardless of their exemption status under USMCA. However, from March 7, a tariff exemption was restored for goods that meet the USMCA’s rules of origin, allowing them to enter the US duty-free.
Key Sectors and Their Tariff Implications
- Autos, Steel, and Aluminum – Products in these areas are subject to the new tariffs unless they comply with USMCA's rules of origin. Compliant goods can bypass the tariffs, while non-compliant ones face the 25% tax.
- Energy Products – A 10% tariff was levied on energy products, with compliant goods (as of March 7) exempt from this tariff.
USMCA Compliance and Rules of Origin
- Preferential Treatment – For duty-free entry into the US, goods must comply with USMCA standards. Many goods (originally tariff-free under the Most Favored Nation status) now need to meet USMCA compliance to avoid the higher tariff rates.
- Tariff-Rate Quotas (TRQs) – Some goods, such as dairy, sugar, and sugar-containing products, have TRQs imposed, allowing limited imports at reduced tariffs. Only within-quota imports are eligible for duty-free entry under USMCA.
Negotiation and Policy Developments
High-level talks are ongoing, with Canadian Prime Minister Mark Carney having a tête-à-tête with US President Donald Trump in early May 2025 to discuss future USMCA policies and tariff issues. These conversations aim to resolve ongoing disputes and clarify the scope of exemptions.
It's essential to note that US tariff policies remain fluid, and negotiations continue in Washington to keep these dynamics in check.
In a Nutshell
- USMCA-compliant goods – Allowed duty-free entry into the US, starting March 7, 2025, if they comply with USMCA rules of origin.
- Non-compliant goods – Subject to 25% (general) or 10% (energy) tariffs.
- TRQs – Apply to select agricultural products; only within-quota amounts qualify for exemption.
- Negotiations Ongoing – USMCA policies continue to evolve, with ongoing dialogues in Washington for clarification and resolution.
- Mark Carney, the Canadian Prime Minister, discussed future USMCA policies and tariff issues with US President Donald Trump in early May 2025, aiming to resolve ongoing disputes and clarify exemption scopes.
- In March 2025, non-compliant goods, including those in sectors like autos, steel, and aluminum, were subjected to a 25% tariff, while energy products faced a 10% tariff.
- From March 7, 2025, USMCA-compliant goods were allowed duty-free entry into the US if they met the USMCA rules of origin.
- Tariff-Rate Quotas (TRQs) have been imposed on select agricultural products under the USMCA, making only within-quota imports eligible for duty-free entry.
