A deep dive into USMCA compliance, US tariffs and Canada

Official data on USMCA compliance significantly underestimates the tariff exemptions being granted to Canadian firms. In June, around 90% of Canadian goods entered the US duty-free, even though only 56% qualified as USMCA-compliant, according to the US Census Bureau.

• In our September baseline, we’re updating our approach to measuring USMCA compliance and other exemptions to account for this discrepancy.
• A combination of factors likely explains why US duties collected from Canada remain low.
• Rising USMCA compliance and other exemptions are cushioning the impact of US tariffs on Canada’s economy.
• Real goods exports and manufacturing sales collapsed in Q2, and we expect the negative impacts of continued trade policy uncertainty on private capital investment, sentiment, and hiring to deepen in the coming quarters.