USMCA compliant goods now safe from Trump but U.S. tariffs remain on Canada

USMCA compliant goods will no longer be subject to U.S. tariffs on Canada after President Donald Trump issued a pause today that will take effect until at least April 2, 2025. 

For those unfamiliar with the acronym, USMCA is the trade agreement that exists between the United States, Mexico and Canada. It took effect back in 2020 and replaced what was previously known as the North American Free Trade Agreement (NAFTA). 

The agreement was formed to provide more opportunities for trade between the three countries and, according to the United States government website, provide mutual benefits for “North American workers, farmers, ranchers, and businesses.”

Today’s update means that the United States will no longer place 25 per cent tariffs on many Canadian goods entering the country. The U.S. will not be pausing the 10 per cent tariffs on Canadian oil and other energy that is not covered under the USMCA. Canadian potash will also be subject to 10 per cent tariffs.

The USMCA does not, however, cover all trade between the two countries. This means that there will still be 25 per cent tariffs on Canadian goods entering the United States that are not covered under the agreement. 

According to officials, 62 per cent of imports into the U.S. from Canada are not USMCA compliant and will still be subject to the 25 per cent tariffs.

According to reports, it’s unlikely that any tariffs already paid this week on Canadian goods entering the United States will be refunded.

The pause technically does not take effect until 12:01 a.m. on Friday, March 7.

In response to today’s announcement, Canada confirmed that the tariffs that went into effect this week on $30 billion worth of U.S. goods crossing into Canada will remain in place, however, Finance Minister Dominic Leblanc said that the second wave of tariffs on $125 billion of U.S. products will not take effect before April 2. 

Ontario Premier Doug Ford also confimed that the province will not be backtracking on its countermeasures meaning that American alcohol products will still remain off the shelves at the LCBO and that Ontario will be proceeding with the 25 per cent surcharge on electricity on March 10.

The United States, for its part, has not removed tariffs it recently applied to goods entering from China. Those will remain in place. There are also planned worldwide tariffs on aluminum and steel that could still go into effect March 12.

In a press conference from the White House earlier today, Trump also suggested that the U.S would be seeking to reduce its reliance on Canadian lumber.

USMCA is also known as CUSMA in Canada.