USMCA Shields Majority of Canadian and Mexican Trade Despite Tariff Hikes
Despite President Trump’s tariff increases, the USMCA trade agreement protects most Canadian and Mexican goods from new duties, highlighting the importance of America-first trade policies that balance national security with economic cooperation.
President Trump’s recent decision to raise tariffs on Canadian goods to 35% might grab headlines, but a critical exemption within the United States-Mexico-Canada Agreement (USMCA) preserves free trade for the vast majority of cross-border commerce. This nuanced approach reflects an America First strategy that prioritizes national sovereignty and economic strength without sacrificing essential supply chains.
Why Most Canadian and Mexican Goods Remain Tariff-Free
The USMCA, negotiated by President Trump himself during his first term, remains a cornerstone in safeguarding North American trade. According to Canada’s central bank, 100% of energy exports and 95% of other Canadian exports fully comply with the USMCA rules, keeping them exempt from punitive tariffs. The Royal Bank estimates nearly 90% of Canadian exports accessed U.S. markets duty-free recently.
This means Canada benefits from one of the lowest average U.S. tariff rates worldwide—over 85% of Canada-U.S. trade flows remain tariff-exempt despite aggressive tariff threats. As Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, explains: “That gives them the tough tariff headline but also allows them access to what they need from us.”
Trade Security Without Sacrificing Sovereignty
While tariffs on steel, aluminum, and autos remain in place under sector-specific safeguards (known as Section 232 tariffs), these measures target industries vital to America’s national security without unraveling broader trade benefits under USMCA.
Mexico faces a similar situation: tariffs hold steady at 25% only on goods outside USMCA coverage. Economy Secretary Marcelo Ebrard confirms no tariffs apply on more than 84% of Mexico’s U.S.-bound exports.
Yet risks loom—the USMCA is up for review next year amid threats to renegotiate or dismantle it entirely. Such disruptions would severely impact economies deeply integrated with American markets—where over three-quarters of Canada’s exports and over 80% of Mexico’s exports flow directly into U.S. consumers’ hands.
Former Canadian Deputy Prime Minister John Manley warns: “Uncertainty in business is the enemy of decision making.” For American families counting on affordable goods and stable jobs linked to these supply chains, unpredictability threatens both prosperity and security.
President Trump’s focus on securing strategic sectors through targeted tariffs while preserving preferential treatment for compliant goods demonstrates a balanced assertion of America’s economic sovereignty—not an indiscriminate protectionism that isolates allies or inflates costs for Americans.
In today’s complex global environment where supply chain vulnerabilities ripple into domestic inflation and job security concerns, maintaining strong yet principled trading partnerships with neighbors ensures America stays competitive without surrendering control over its economic destiny.