Canada could be trade winner as U.S. tariffs undershoot global competitors by wide margin, says report

Calgary Herald

3 days ago

The tariff rate imposed on Canadian exports by the United States is estimated to be the lowest amongst the world's trading countries, meaning that Canada could end up coming out ahead in Donald Trump 's trade war, a new report says.
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Oxford Economics Group Ltd. estimates the U.S.'s current effective tariff rate on Canada is 2.5 per cent, placing it below Mexico at four per cent and well below other major U.S. trading partners.
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For example, the U.S. tariff rate is 35 per cent on China, 15 per cent on Japan, 13 per cent on South Korea and eight per cent on the United Kingdom and the European Union, based on data from calculated duties as a share of imports, Oxford said.
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'If the relatively low tariffs apparently being paid on imports from Mexico and Canada persist, these two economies could pick up some benefits from shifts in supply chains, although uncertainties over the endgame for tariffs and the future of the (Canada-United States-Mexico Agreement) will be near-term drags,' Adam Slater, lead economist at Oxford Economics, said in the report.
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CUSMA-compliant goods escape U.S. tariffs, though the trade agreement is scheduled to be reviewed in July 2026, but some people, including Ontario Premier Doug Ford, think that deadline could be accelerated.
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Still, Slater described the current estimates for the tariff rates 'as something of a puzzle.'
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One set of trade data from the U.S. Census Bureau indicates that 56 per cent of goods entering the U.S. from Canada and 47 per cent from Mexico are compliant with CUSMA, while other Census Bureau data suggests the rates are 91 per cent and 84 per cent, respectively.
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'It may be the case that tariff exemptions for these economies are broader than assumed,' Slater said.
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Slater said Oxford based its overall 2.5 per cent tariff rate for Canada on a higher level of CUSMA compliance, 'while not directly' adhering to the 91 per cent level.
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But trade between the U.S. and Canada hasn't escaped unscathed.
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'The biggest negative impacts have been in Canada, where imports are down 25 per cent from January levels, and in China, where imports are down 50 per cent from January,' Slater said, adding that 'Chinese data on exports to the U.S. shows a much less dramatic decline of around 25 per cent since January,' possibly due to rerouting of goods through other countries.