Not all goods can easily become USMCA-compliant, leaving some businesses vulnerable – The Globe and Mail Not all goods can easily become USMCA-compliant, leaving some businesses vulnerable – The Globe and Mail

Trade experts believe that most Canadian exports to the U.S. are eligible for preferred treatment under the United States-Mexico-Canada Agreement (USMCA or CUSMA), but only about 40% of them are typically exported that way. Many exporting businesses have been choosing not to complete the necessary country-of-origin and other paperwork required to qualify, as their products face low- or even zero-tariff rates under the World Trade Organization’s “most favoured nation” rule.

Since U.S. President Donald Trump introduced 25% tariffs on Canadian goods that are not compliant with the USMCA, however, businesses now have even greater incentive to complete that paperwork. But some sectors that won’t easily be able to adjust their supply chains and manufacturing processes will have a much harder time meeting the USMCA’s product-specific rules of origin, leaving them subject to the new tariffs.

Osler International Trade and Investment partner Jesse Goldman tells The Globe and Mail that businesses in the aerospace, telecommunications and medical equipment industries could be especially vulnerable.

“Canadian manufacturers that rely on a lot of inputs from Europe and from Asia, and can’t switch and change up their supply chain very quickly, are going to be facing the 25% tariff until such time as they can either make their goods USMCA-compliant or figure out a different way to manufacture them in Canada,” he says.

If you have a subscription, you can read the full article, “Not all goods can easily become USMCA-compliant, leaving some businesses vulnerable,” on the Globe and Mail website.