By ROB GILLIES
TORONTO (AP) — U.S. President Donald Trump raised the tariffs on Canadian items to 35% final week, however a key exemption for Canada and Mexico shields the overwhelming majority of products from the punishing duties.
Items that adjust to the 2020 United States-Mexico-Canada Settlement commerce pact that Trump negotiated throughout his first time period are excluded from the tariffs.
Right here’s a have a look at Trump’s tariffs on the 2 international locations and their exemptions:
Most Canadian exports reaching the united statesduty free
Canada’s central financial institution says 100% of power exports and 95% of different exports are USMCA compliant. The Royal Financial institution estimated that nearly 90% of Canadian exports seem to have accessed the U.S. market responsibility free in April.
Canadian Prime Minister Mark Carney stated the dedication of the US to the core of USMCA, reaffirmed once more final week, means the U.S. common tariff price on Canadian items stays considered one of its lowest, and over 85% of Canada-U.S. commerce continues to be tariff free.
“Canada is better off than any of the trading partners right now because the Americans appear to be relying as a default on USMCA,” stated Flavio Volpe, president of the Automotive Elements Producers’ Affiliation. “That gives them the tough tariff headline but also allows them the access to the stuff they need from us. Because of that we’re in a relative better position.”
Canadian and Mexican firms can declare preferential therapy below the USMCA primarily based on the place the merchandise are made.
Manley stated Canada is doing okay regardless of the financial uncertainty.
“There is a lot of resilience I’d say. The Canadian economy has done relatively well, better than most of us expected, and remember that there is no tariffs on any of our energy exports,” he stated.
25% tariffs on Mexican items goal a small slice of commerce
Trump stated final week he would enter right into a 90-day negotiating interval with Mexico, additionally considered one of America’s largest buying and selling companions. The present 25% tariff charges are staying in place, down from the 30% he had threatened earlier.
However that 25% solely applies to the fraction of Mexico’s commerce with the U.S. that isn’t coated by the USMCA. Shortly after talking with Trump on Thursday, President Claudia Sheinbaum stated that throughout the “new commercial world order,” Mexico was nonetheless the most effective positioned nation due to the free commerce settlement.
“What’s within (USMCA) has no tariff, with the exception of what we already know: autos, steel and aluminum; and what is outside the treaty has 25%,” Sheinbaum stated.
However Financial system Secretary Marcelo Ebrard identified that below the USMCA no tariffs have been paid on greater than 84% of Mexico’s commerce with the US.
Most imports from Canada and Mexico are nonetheless protected by the USMCA, however the deal is up for evaluation subsequent yr. U.S. Commerce Secretary Howard Lutnick stated final month: “I think the president is absolutely going to renegotiate USMCA.”
Preserving the free commerce pact shall be crucial for Canada and Mexico.
“It would be an incredible disruption to lose it especially if you lost it to the levels of tariffs Trump is imposing, 30%, 25% or even 20%. You can absorb a single digit tariff level across the board but you can’t adjust that kind of increase,” Manley stated.
Greater than 75% of Canada’s exports go to the U.S. whereas greater than 80% of Mexico’s exports go there.
Manley stated that relying on how the commerce conflict performs out the danger to the USMCA could be very excessive. “Uncertainty in business is the enemy of decision making,” he stated.
Charging for entry
Carney stated in a collection of latest agreements with different international locations that America is, in impact, charging for entry to its financial system.
Manley stated the funding thesis for Canada is fairly simple as Canada is wealthy in pure assets, has a talented labor power, is open to immigration and has unfettered entry to the U.S. market, the biggest financial system on this planet.
“If that latter point is no longer the case, we’ve still got all the others, but we’ve got to really redevelop the investment thesis for attracting investment to Canada,” Manley stated.
Trump has some sector particular tariffs, referred to as 232 tariffs, which might be having an influence. There’s a 50% tariff on metal and aluminum imports and a 25% tariff on auto imports, although there’s a carve-out for Canadian and Mexican made vehicles.
“Despite our advantages, certain major Canadian industries are being severely impacted by U.S. trade actions. These strategic sectors include autos, steel, aluminum, copper, pharmaceuticals, semiconductors, and of course, softwood lumber,” Carney stated Tuesday. “It is clear we cannot count or fully rely on what has been our most valued trading relationship for our prosperity.”
Related Press author Fabiola Sánchez in Mexico Metropolis contributed to this report.
Initially Printed: August 5, 2025 at 5:46 PM EDT
