Trump’s new tariffs will be ‘a crack in the CUSMA shield,’ industry groups warn
Canada’s economy has so far been partly protected from the impact of US President Donald Trump’s tariffs through key exemptions under the Canada-United States-Mexico Agreement (CUSMA). However, business groups warn that the proposed new 50% tariffs could weaken that protection and create significant challenges for Canadian exporters.
On July 24, Trump announced broad new tariffs targeting most US trading partners. Canada and Mexico, however, retained duty-free treatment for many goods traded under CUSMA, helping shield Canadian businesses from some of the worst effects of the escalating trade dispute.
“If those new tariffs are implemented, there will be a crack in the CUSMA shield,” said Jasmin Guenette, vice-president of national affairs at the Canadian Federation of Independent Business (CFIB).
“The CUSMA shield will no longer exist as before. And who knows what could happen after?” he added.
The potential impact on Canadian exporters could be substantial. According to a recent CFIB survey, about two in five Canadian exporters said they currently sell products to the US that could be affected by the proposed tariffs.
Among those businesses, more than three-quarters, or 77%, said they expect to lose revenue if the tariffs are introduced. Meanwhile, 35% said they could lose at least half of their revenue.
Industry leaders say the proposed measures could put additional pressure on Canadian manufacturers and exporters that rely heavily on access to the US market.
Dennis Darby, president of Canadian Manufacturers and Exporters, estimated that the Section 338 tariffs could affect nearly $28 billion worth of Canadian exports to the United States.
That amount represents more than 5% of Canada’s total goods exports to the US, highlighting the potential scale of the economic impact if the new tariffs come into force.
Business groups are now urging both governments to reach an agreement and preserve the tariff protections provided under CUSMA, warning that further trade restrictions could increase costs, reduce revenues and threaten the competitiveness of Canadian exporters.
