They noted that proposed US Section 301 tariffs due to replace expiring Section 122 measures later this month have kept CUSMA exemptions in place. Should the agreement ever collapse, the economists estimated the resulting tariff hit would be smaller than it once looked. US duties that would replace CUSMA’s duty free access now sit at 10%, down from the 35% rate that applied under earlier IEEPA measures before a Supreme Court ruling against them in February.
Separate exemption lists covering roughly half of Canadian exports would also remain untouched by CUSMA’s status, the economists said, leaving about a third of currently exempted exports exposed to that 10% rate in a worst case scenario.
On that basis, RBC estimated the average effective US tariff on Canadian exports could roughly double to 6.6% without CUSMA protection, still low by comparison with other major US trading partners, though auto parts, machinery, plastics, aluminum and wood products would see the steepest dollar impact.
RBC’s base case assumes the review proceeds with CUSMA and its exemptions continuing to operate as is, though the economists flagged rules of origin requirements as an area likely to draw attention, given the US may push for higher North American or domestic content thresholds. Most Canada-US trade already clears those thresholds comfortably, with more than 90% of US imports from Canada carrying North American content last year.
Government moves to ease meat trade barriers
The public appetite for a more self-reliant food system is playing out on the regulatory side too. On July 2, the Canadian Food Inspection Agency proposed time-limited amendments to the Safe Food for Canadians Regulations that would make it easier to move red meat across provincial lines, a step tied to the government’s National Food Security Strategy.