Canadian exporters from various industries can avoid the blanket tariffs proposed by U.S. President Donald Trump by adhering to the Canada-U.S.-Mexico Agreement (CUSMA), a trilateral free trade pact established in 2018. Officials from both the U.S. and Canada have confirmed that the upcoming tariffs set by Trump will not impact goods compliant with CUSMA terms. Experts in trade policy suggest that a large portion of Canadian exports are eligible for this exemption, prompting a rush among companies to ensure their products meet the necessary criteria.
CUSMA compliance is crucial for safeguarding a significant portion of Canada’s cross-border trade against potential tariffs imposed by Trump. In March, Trump implemented 25% tariffs on most Canadian exports to the U.S., exempting products qualifying for duty-free status under CUSMA from these tariffs. Approximately 86% of the total value of Canada’s exports to the U.S. could potentially benefit from this exemption, allowing them to enter the U.S. market without tariffs, as per an analysis by RBC Economics.
Wolfgang Alschner, the Hyman Soloway Chair in Business and Trade Law at the University of Ottawa, emphasized that this exemption provides Canada with a notable competitive edge globally, as most countries face widespread tariffs on exports to the U.S. The exemption does not apply to certain products subject to Trump’s specific tariffs, such as steel, aluminum, and non-U.S. content in automobile imports.
The compliance process involves demonstrating that a product meets CUSMA’s rules of origin, requiring a substantial percentage of the product to originate from within North America to qualify for tariff-free status. Laura Dawson, executive director of the Future Borders Coalition, highlighted the increasing necessity for Canadian exporters to prove compliance with these rules, even though it can be a meticulous and time-consuming process.
To ensure compliance with CUSMA, exporters need to acquire a certificate of origin, facilitating a smooth, tariff-free passage for their products across the border. Official trade data indicates a growing trend of companies engaging in this paperwork, with nearly 90% of Canadian goods entering the U.S. duty-free in recent months. While Trump’s administration hints at inevitable tariffs on some Canadian exports, maximizing the number of exports exempt from tariffs remains a priority for Canada’s trade negotiators as the CUSMA renegotiation is slated for July 2026.
