{"id":3337,"date":"2025-09-12T15:05:17","date_gmt":"2025-09-12T15:05:17","guid":{"rendered":"https:\/\/www.rbc.com\/en\/economics\/2025\/09\/12\/u-s-tariffs-spare-most-canadian-exports-but-hit-key-sectors\/"},"modified":"2026-03-31T19:23:47","modified_gmt":"2026-03-31T19:23:47","slug":"u-s-tariffs-spare-most-canadian-exports-but-hit-key-sectors","status":"publish","type":"post","link":"https:\/\/www.rbc.com\/en\/economics\/us-analysis\/us-featured-analysis\/u-s-tariffs-spare-most-canadian-exports-but-hit-key-sectors\/","title":{"rendered":"U.S. tariffs spare most Canadian exports but hit key sectors"},"content":{"rendered":"\n<section class=\"wp-block-rbc-section-block  pos-rel\" style=\"border-radius:0px\">\n<div class=\"wp-block-rbc-section-inner-block  section-inner\" style=\"border-radius:0x\">\n<div class=\"wp-block-columns pad-t-hlf mob-pad-t-hlf pad-b-hlf mob-pad-b-hlf pad-l-hlf mob-pad-l-hlf pad-r-hlf mob-pad-r-hlf has-rbc-bright-blue-tint-4-background-color has-background is-layout-flex wp-container-core-columns-is-layout-65eef5bf wp-block-columns-is-layout-flex\" style=\"border-style:none;border-width:0px;border-radius:5px\">\n<div class=\"wp-block-column pad-b-hlf mob-pad-b-hlf pad-t-hlf mob-pad-t-hlf is-layout-flow wp-block-column-is-layout-flow\" style=\"flex-basis:98%\">\n<div class=\"wp-block-media-text is-stacked-on-mobile is-vertically-aligned-center mar-l-hlf pad-l-hlf\" style=\"grid-template-columns:22% auto\"><figure class=\"wp-block-media-text__media\"><img decoding=\"async\" src=\"https:\/\/www.rbc.com\/en\/economics\/wp-content\/uploads\/sites\/23\/2025\/07\/mfu-07-3.2.png?quality=80&amp;w=1024\" alt=\"\" class=\"wp-image-16428 size-full\" \/><\/figure><div class=\"wp-block-media-text__content\">\n<p>We have argued <a href=\"https:\/\/www.rbc.com\/en\/thought-leadership\/economics\/economy-and-markets\/financial-markets-monthly\/its-a-new-dawn-day-and-no-ones-feeling-good\/\" target=\"_blank\" rel=\"noreferrer noopener\" data-dig-id=\"LP-U.S.Analysis-FeaturedAnalysis-US-3337-5a4a632b\" data-dig-label=\"since March \" data-dig-action=\"link click\" data-dig-category=\"LP-U.S.Analysis-FeaturedAnalysis-US\" class=\"rbc-link-format\">since March<\/a> that the exemption from tariffs for most U.S. imports compliant with the CUSMA would maintain duty-free access for most Canadian exports, and that has largely remained true so far.<\/p>\n<\/div><\/div>\n<\/div>\n<\/div>\n\n\n\n<p>In July, 88% of U.S. imports from Canada were duty free, according to U.S. Census Bureau data\u2014down slightly from about 90% on average in Q2\u2014but still covering most Canadian exports.<\/p>\n\n\n\n<p>This doesn\u2019t mean the Canadian economy is not being impacted by U.S. tariffs. Section 232 measures imposed on a short list of Canadian products are still having a significant, but concentrated, negative impact on jobs, production and exports in related sectors.<\/p>\n\n\n\n<h4 class=\"wp-block-heading has-rbc-bright-blue-color has-text-color has-link-color has-text-lg-font-size wp-elements-60929ae58c402e95003e3e1fe829064c\" id=\"h-which-canadian-products-are-tariffed\"><strong><strong><strong>Which Canadian products are tariffed?<\/strong><\/strong><\/strong><\/h4>\n\n\n\n<p>U.S. tariffs on imports from Canada\u2014the 12% of Canadian exports to the U.S. that were <em>not <\/em>duty free as of July\u2014are heavily concentrated in a subset of industries.<\/p>\n\n\n\n<p>They can be broadly aggregated into three categories. Auto and parts (HS 87), steel and aluminum products (HS 72, 73, 76) and other machinery, parts and equipment including aerospace products (HS 84, 85, 88) each accounted for 57%, 23% and 12%, respectively, (over 90% combined) of total goods exports that were tariffed in July, according to the U.S. Census Bureau.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-text-color has-rbc-bright-blue-tint-1-color has-alpha-channel-opacity has-rbc-bright-blue-tint-1-background-color has-background is-style-wide wide\" \/>\n\n\n\n<div id=\"everviz-sYRxQyuaN\" class=\"everviz-sYRxQyuaN\" data-view=\"graph\"><\/div>\n\n\n\n<hr class=\"wp-block-separator has-text-color has-rbc-bright-blue-tint-1-color has-alpha-channel-opacity has-rbc-bright-blue-tint-1-background-color has-background is-style-wide wide\" \/>\n\n\n\n<p>Together, tariffed goods from Canada were subject to an average U.S. tariff of as high as 27% in July\u2014well above the average 3% tariff across all imports from Canada.<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-rbc-bright-blue-color has-text-color has-link-color has-text-lg-font-size wp-elements-cd6634788029471fe8c8af6cf9c34698\" id=\"h-how-has-that-impacted-foreign-demand-for-these-products-and-others\"><strong><strong><strong>How has that impacted foreign demand for these products and others?<\/strong><\/strong><\/strong><\/h3>\n\n\n\n<p>A lack of decline in U.S. import price index (excluding petroleum products) suggests <a href=\"https:\/\/www.rbc.com\/en\/thought-leadership\/economics\/economy-and-markets\/financial-markets-monthly\/u-s-tariffs-fall-short-of-goals-leaving-outlook-little-changed\/\" target=\"_blank\" data-dig-id=\"LP-U.S.Analysis-FeaturedAnalysis-US-3337-5a4a632b\" data-dig-category=\"LP-U.S.Analysis-FeaturedAnalysis-US\" data-dig-action=\"link click\" data-dig-label=\"U.S. buyers are paying\" rel=\"noreferrer noopener\" class=\"rbc-link-format\">U.S. buyers are paying<\/a> most of those increased tariff costs with minimal evidence of discounting in foreign country export prices to offset the costs. Those surging tariff costs have led to slower demand for Canadian products.<\/p>\n\n\n\n<p>Canadian goods exports to the U.S. were 5% lower in July from a year ago excluding petroleum product exports (which have declined largely due to lower oil prices from a year ago rather than tariff impacts.) The decline was also entirely accounted for by products subject to substantial tariffs\u2014we define these as products where the share of trade with duties applied is above 5%.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-text-color has-rbc-bright-blue-tint-1-color has-alpha-channel-opacity has-rbc-bright-blue-tint-1-background-color has-background is-style-wide wide\" \/>\n\n\n\n<div id=\"everviz-427uZT32l\" class=\"everviz-427uZT32l\" data-view=\"graph\"><\/div>\n\n\n\n<hr class=\"wp-block-separator has-text-color has-rbc-bright-blue-tint-1-color has-alpha-channel-opacity has-rbc-bright-blue-tint-1-background-color has-background is-style-wide wide\" \/>\n\n\n\n<p>Among these tariffed products, exports to the U.S. fell by $5.9 billion, or 10% between January and July compared to last year. Meanwhile, other exports predominantly shielded by CUSMA-related exemptions rose by $1.6 billion or 2% cumulatively during the same period.<\/p>\n\n\n\n<p>Outcomes also varied significantly within tariffed goods. Canadian exports of steel and aluminum products to the U.S. and aerospace products plunged by 40% and 39%, respectively, in July from last year. Auto and parts exports only declined by 7% despite substantial tariffs levied on the non-U.S. content of finished vehicles.<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-rbc-bright-blue-color has-text-color has-link-color has-text-lg-font-size wp-elements-48e37bb861dba53adaa5bab9d7118373\" id=\"h-what-s-next-for-cusma\"><strong><strong>What\u2019s next for CUSMA?<\/strong><\/strong><\/h3>\n\n\n\n<p>The substantial impact on Canadian products targeted with tariffs further reinforces the importance of current CUSMA exemptions that give duty free access for most Canadian exports. The backstop is preventing a targeted trade shock in Canada from spreading more significantly across other sectors of the economy.<\/p>\n\n\n\n<p>And as we have <a href=\"https:\/\/www.rbc.com\/en\/thought-leadership\/economics\/featured-insights\/how-cusma-strengthens-both-u-s-and-canadian-economies\/\" target=\"_blank\" data-dig-id=\"LP-U.S.Analysis-FeaturedAnalysis-US-3337-5a4a632b\" data-dig-category=\"LP-U.S.Analysis-FeaturedAnalysis-US\" data-dig-action=\"link click\" data-dig-label=\"argued before\" rel=\"noreferrer noopener\" class=\"rbc-link-format\">argued before<\/a>, the exemption is also helping U.S. importers avoid even larger import cost increases, particularly among U.S. manufacturers that are already struggling under the weight of tariffs imposed on sector specific products, and broader measures on imports from offshore trade partners.&nbsp;<\/p>\n\n\n\n<p>A \u201cjoint review\u201d of CUSMA is set to begin in 2026 or earlier, but the agreement does not expire until 2036. That is unless one country unilaterally withdraws by providing six months\u2019 notice (no negotiations required).&nbsp;<\/p>\n\n\n\n<p>The fact that the U.S. and Canada have worked to preserve CUSMA so far is a good sign, along with future negotiations scheduled to start a decade before the sunset of the agreement to allow ample time to address concerns. With CUSMA exemptions largely expected to hold, we cautiously expect trade headwinds will have limited further direct impact on the Canadian economy.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity wide is-style-wide\" \/>\n\n\n\n<p class=\"has-text-align-center\"><strong>About the Author<\/strong><\/p>\n\n\n\n<p class=\"has-text-align-left\"><em><strong>Claire Fan<\/strong>&nbsp;is a Senior Economist at RBC. She focuses on macroeconomic analysis and is responsible for projecting key indicators including GDP, employment and inflation for Canada and the US.<\/em><\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity is-style-wide wide\" \/>\n<\/div>\n<\/section>\n","protected":false},"excerpt":{"rendered":"<p>Tariffs on a short list of Canadian products are still having a significant, but concentrated, negative impact.<\/p>\n","protected":false},"author":318,"featured_media":3111,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"advgb_blocks_editor_width":"","advgb_blocks_columns_visual_guide":"","footnotes":""},"categories":[94,81],"tags":[109,110],"class_list":["post-3337","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-us-featured-analysis","category-us-analysis","tag-tariffs","tag-u-s"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.7 (Yoast SEO v26.8) - 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