This week, the U.S. made a big move on trade, one that has already sent ripples through the market and will likely continue to do so in the weeks to come. Let’s break down what’s happening, how it affects Canada, and what I’ll be keeping an eye on for you.
So, what’s going on?
The U.S. has introduced a minimum global tariff rate of 10 per cent on all countries, with tariffs as high as 49 per cent for those with significant trade imbalances. That’s a major shift in the trade landscape.
What does this mean for Canada?
Right now, Canada and Mexico have been spared from any new tariffs (a sigh of relief), but that doesn’t mean we’re off the hook:
- Non-CUSMA goods from Canada still face a 25 per cent tariff
- Non-CUSMA energy and potash are hit with a 10 per cent tariff
- CUSMA-compliant goods remain exempt
- Pre-existing tariffs on Canadian steel, aluminum, and autos are still in place
There’s also a new clause in the mix: if the current tariff regime (justified through the lens of fentanyl trafficking) is removed, non-Canadian-United States-Mexico-Agreement (CUSMA) goods would then face a lower tariff of 12 per cent instead of 25 per cent. So, potentially a bit of relief down the road—but no guarantees.
Some good news! Gold and copper are exempt from reciprocal tariffs. It’s not a sweeping win, but it’s something.
What industries are most affected?
For Canadian businesses, especially those in steel, aluminum, and any non-CUSMA-compliant sectors, this remains a challenging environment. With trade costs staying high, margins can shrink, and pricing pressure might be passed on to consumers. So, for those of us wondering whether these changes will affect our households, the answer is looking like a ‘yes.’
What about the global impact?
These changes are rooted in concerns about trade imbalances, but high tariffs often come with consequences. Trade tensions can strain international relationships and add volatility to already fragile markets. It’s no surprise we’ve seen a market sell-off in response.
Countries facing the steepest tariffs will feel the pressure the most, but globally, we could see ripple effects in supply chains, inflation, and economic stability.
This isn’t a “one and done” kind of announcement, it’s an evolving situation, and I’ll be watching it closely. For now, CUSMA keeps things relatively steady for many Canadian industries, but that stability has limits. For clients and businesses impacted by these tariffs, I’m here to help make sense of what this could mean for your financial strategy.
As always, more to come.
