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For Canada, 35% tariffs but many exemptions

While Canada is standing firm against Washington, the country has been hit with 35% tariffs, 10 points higher than previously set. However, the trade agreement signed during Donald Trump's first term should enable Canada to mitigate the impact of these measures.

Antoine Alves d'Oliveira

Published on 07/11/2025 at 03:47 pm BST

TSX COMPOSITE

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For Canada, 35% tariffs but many exemptions

Now it is Canada's turn to receive its letter. Yesterday, Donald Trump published a letter addressed to the Canadian Prime Minister, in which he set the customs duties applied to his neighbor at 35%. This is a significant increase from the 25% currently in force.

For Canada, this is a significant amount, given that the two economies are highly integrated.

However, Canada already benefits from numerous exemptions (on current tariffs). And these are expected to remain in place, according to an official source quoted by Bloomberg. Energy and fertilizers should therefore remain taxed at 10%. And products covered by the USMCA free trade agreement (which came into force in 2020, replacing the 1994 NAFTA) should not be affected.

However, according to estimates by the US International Trade Commission, almost 60% of imports from Canada now comply with the USMCA.

Sources: US International Trade Commission, Bloomberg

If these rules are applied, the average tariff rate applied to Canadian products will therefore be significantly lower than the 35% mentioned by Donald Trump.

Exemptions are therefore a key point in the trade negotiations, with each country seeking to protect the interests of its most strategic or politically sensitive sectors. The European Union is now reportedly willing to accept tariffs of 10% in exchange for exemptions for key sectors such as aeronautics and wines and spirits.

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