Introduction
Mexico and Canada have successfully avoided new tariffs after President Trump exempted them from his proposed 10% global tariff, although pre-existing tariffs remain in effect.Context
Goods from both Mexico and Canada that adhere to the USMCA (United States-Mexico-Canada Agreement) will largely continue to be exempt from tariffs. However, auto exports, as well as steel and aluminum imports, are subjected to different tariff regulations.Developments
Previously, Trump imposed a 25% tariff on both countries due to concerns over migration and fentanyl trafficking. However, a provision was made for USMCA-compliant goods. The White House stated that the current orders concerning fentanyl and migration will remain unchanged. If these orders are lifted, compliant goods will still receive preferential treatment, while non-compliant goods will face a 12% reciprocal tariff.Analysts view this as a positive outcome for Canada and Mexico, with Michael Camunez, CEO of Monarch Global Strategies, noting that the two nations likely avoided a much worse situation. Candace Laing, president of the Canadian Chamber of Commerce, expressed hope that these developments could lead to a more substantive negotiation and a long-term partnership.