Crucial exemption allows majority of Canadian and Mexican goods to be shipped to US without tariffs

Source: AP

Updated 6:24 PM EDT, August 5, 2025


TORONTO (AP) — U.S. President Donald Trump raised the tariffs on Canadian goods to 35% last week, but a key exemption for Canada and Mexico shields the vast majority of goods from the punishing duties. Goods that comply with the 2020 United States-Mexico-Canada Agreement that Trump negotiated during his first term are excluded from the tariffs. Here’s a look at Trump’s tariffs on the two countries and their exemptions:

Most Canadian exports reaching the US duty free

Canada’s central bank says 100% of energy exports and 95% of other exports are compliant with the trade pact, known as USMCA. The Royal Bank estimated that almost 90% of Canadian exports appear to have accessed the U.S. market duty free in April.

Canadian Prime Minister Mark Carney said the commitment of the U.S. to the core of USMCA, reaffirmed again last week, means the U.S. average tariff rate on Canadian goods remains one of its lowest, and over 85% of Canada-U.S. trade 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,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association. “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.”

Read more: https://apnews.com/article/trump-tariffs-canada-mexico-exemption-969a4cfb03638ce9d6c0ffad2b98b4b1