Tariff exemptions were Canada’s salvation in 2025. Why they’re at risk in 2026

Experts warned this saving grace for the economy is at risk in 2026 as North American trade officials prepare for a review of the Canada-U.S.-Mexico agreement, or CUSMA.

U.S. President Donald Trump‘s tariff campaign appeared to move at a breakneck pace towards Canada’s economy this year.

But beyond threats of double-digit tariff rates and sharp pain in manufacturing-heavy industries, a key exemption has allowed the majority Canadian goods to continue to cross the southern border duty-free.

Experts who spoke to The Canadian Press warned this saving grace for the economy is at risk in 2026 as North American trade officials prepare for a review of the Canada-U.S.-Mexico agreement, or CUSMA.

“It would be a worst-case scenario of the (CUSMA) deal basically being eliminated or not renewed,” said Tony Stillo, director of Canada economics at Oxford Economics.

“And that would put the full weight of the current tariffs — without compliance or exemptions or carve-outs — on the economy.”

Over the course of 2025, the Trump administration levied waves of tariffs on different goods using various mechanisms and justifications.

In addition to steep sectoral specific tariffs on key industries like steel, aluminum and softwood lumber, the current blanket tariff on Canadian goods heading to the United States stands at 35 per cent.

But the vast majority of Canadian businesses exporting to the United States are not paying that tariff rate. Data from the U.S. Census Bureau showed 90 per cent of Canadian goods entered the States tariff-free as of July.