Many Canadian exports can avoid Trump tariffs if CUSMA-compliant. Here’s

Canadian exporters across a wide range of industries have a way to escape U.S. President Donald Trump’s blanket tariffs. 

That escape hatch is compliance with the Canada-U.S.-Mexico Agreement (CUSMA), the three-way free trade deal signed by Trump back in 2018. 

U.S. and Canadian officials have said the across-the-board tariffs Trump is threatening to impose on Aug. 1 won’t apply to goods that comply with the terms of CUSMA. 

Trade policy experts say the vast majority of Canadian exports can qualify for this exemption, and that’s leading to a stampede of companies rushing to do the paperwork to get their products deemed compliant.

Here’s what you need to know about CUSMA compliance and how it could protect much of Canada’s cross-border trade from Trump’s tariffs. 

What is the CUSMA exemption, and why does it matter?

Back in March, Trump imposed 25 per cent tariffs on Canadian exports to the U.S., except energy and potash, which were hit with a 10 per cent tariff. (That’s the blanket tariff he’s threatening to boost to 35 per cent if there’s no deal reached by Aug. 1.) 

However, Trump quickly amended those tariffs, exempting products that qualify for duty-free status under CUSMA. That exemption — originally characterized as a one-month pause — remains in effect. 

Around 86 per cent of the value of Canada’s exports to the U.S. have the potential to qualify for that exemption and cross the border without tariffs, according to an analysis by RBC Economics. 

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Wolfgang Alschner, the Hyman Soloway Chair in Business and Trade Law at the University of Ottawa, says this gives Canada “a huge comparative advantage” over the rest of the world, which faces broad-based tariffs on nearly all exports to the U.S. 

“It’s a huge deal,” said Alschner in an interview. “It’s not perfect and it’s not good for some [sectors], but overall it’s the best deal for any country in the world that currently exists.” 

Which Canadian exports are tariff-exempt through CUSMA?

Since the vast majority of products have the potential to qualify for the exemption, it’s actually quicker to list the products that don’t.

Products that contain predominantly non-North American content that are merely shipped on to the U.S. from Canada don’t qualify as CUSMA-compliant.

The exemption does not apply to products that face Trump’s sector-specific tariffs — namely the 50 per cent tariff on steel and aluminum and the 25 per cent tariff on non-U.S. content of automobile imports.

But beyond those sectors,…