USMCA Review Looms: Canadian Export Tariffs Could Surge Beyond 7% in 2024
- Why the USMCA Review Could Be a Ticking Time Bomb for Canada
- Trump’s China Card: How EVs Sparked the Fire
- Trade Officials Play Damage Control
- The Domino Effect on Canada’s Economy
- Could China Be Canada’s Lifeline?
- What’s Next? Three Possible Scenarios
- FAQ: Your USMCA Questions Answered
The upcoming USMCA review threatens to destabilize Canada’s trade landscape, with tariffs on exports to the U.S. potentially exceeding 7% if negotiations falter. Amid tensions over Canada’s deal with China and Trump’s renewed criticism, industries from autos to lumber brace for impact. Here’s why this matters—and what’s at stake.
Why the USMCA Review Could Be a Ticking Time Bomb for Canada
With the USMCA agreement set for its six-year review on July 1, 2024, Canada faces a precarious scenario. Former President Trump’s recent warnings suggest he’s willing to weaponize tariffs, claiming the pact “holds America back.” Economists warn that failure to renew could trigger average tariffs of 7%+ on Canadian exports—a gut punch for sectors like automotive (23% of exports) and agriculture (11%).
Trump’s China Card: How EVs Sparked the Fire
The flashpoint? Canada’s January 16 deal with China, allowing 49,000 annual EV imports (under 3% of Canada’s auto market). TRUMP initially called it “fine,” but now accuses Canada of becoming “China’s dumping ground.” BTCC analysts note the irony: “The same deal lowers Chinese tariffs on Canadian food exports—a win Trump himself praised weeks ago.”
Trade Officials Play Damage Control
Canadian Trade Minister Dominic LeBlanc insists the China pact is merely a “tariff fix,” not a free-trade agreement. Meanwhile, U.S. industries overwhelmingly support USMCA—85% of testimonies during USTR hearings backed it, per Scotiabank data. Yet Trump’s rhetoric overshadows reality: USMCA replaced NAFTA with stricter labor and environmental rules he once championed.
The Domino Effect on Canada’s Economy
With 75% of exports destined for the U.S., Canada can’t afford missteps. Industries already reeling from Trump’s 2018 steel/aluminum tariffs (25% and 10%, respectively) fear worse. Desjardins economist Randall Bartlett warns: “Companies are freezing expansion plans—2024 investment growth may flatline at 0.6%, half of 2023’s pace.”
Could China Be Canada’s Lifeline?
Some see strategic value in Canada’s China pivot. “Diversification reduces U.S. leverage,” notes Matthew Holmes of the Canadian Chamber of Commerce. But it’s a gamble: China accounts for just 5% of Canada’s trade versus 65% for the U.S. The BTCC team cautions: “Overplaying this hand could backfire before USMCA talks even start.”
What’s Next? Three Possible Scenarios
1.USMCA gets rubber-stamped with minor tweaks.
2.Trump imposes selective tariffs, targeting autos and dairy.
3.Annual reviews begin, creating perpetual uncertainty.
FAQ: Your USMCA Questions Answered
When does USMCA expire?
The pact automatically renews for 16 years if no party objects by July 1, 2036. However, any country can exit with 6 months’ notice.
How would 7% tariffs impact consumers?
Expect price hikes on everything from Canadian maple syrup (17% U.S. market share) to auto parts ($20B annual trade).
Could Canada join USMCA with Mexico?
Unlikely. Mexico’s President Obrador prioritizes U.S. ties, calling Canada’s China deal “naive” in a February 16 Reuters interview.
