Developments in trade and tariffs

On September 19^th, 2025 Canada-U.S. Trade Minister Dominic LeBlanc officially kicked off public consultations ahead of the joint review of the Canada-U.S.-Mexico Agreement (CUSMA) in 2026. The government posted a public notice seeking comments and feedback from provinces and territories, Canadian industry, unions and workers, Indigenous communities and other stakeholders until November 3^rd, as it gears up to negotiate formally with the U.S. and Mexico by July 1, 2026. The request for public comments and feedback is in addition to sector-specific recommendations already submitted by provincial leaders and premiers. Business groups in Canada, the U.S. and Mexico are calling for a review of the CUSMA trade pact, rather than withdrawing from it. One of the key purposes of the agreement’s six-year review is to assess whether all three countries wish to renew it. While President Trump has expressed praise for the deal, he has also referred to it as “transitional” and questioned its continued relevance.

On September 18^th, following a two-day trade mission to Mexico to bolster economic ties, Prime Minister Carney signed a new economic and security agreement with Mexican President Claudia Sheinbaum, which the two leaders have said will “complement” CUSMA. The new Comprehensive Strategic Partnership agreement deepens ties between Canada and Mexico and includes:

• Prioritizing the development of long-term infrastructure, including ports, rail, and energy corridors
• Creating a new bilateral security dialogue to disrupt transnational organized crime, drug trafficking, human trafficking, money laundering, and cybercrime
• Building more opportunities for trade and investment – from energy and infrastructure to critical minerals and agriculture
• Reinforcing climate and conservation co-operation to protect wildlife and freshwater systems

The Federal government announced it would deliver the federal budget on November 4^th, the first budget tabled under Prime Minister Mark Carney.

September 8, 2025

On September 5, 2025 Prime Minister Mark Carney outlined a strategy to protect Canada’s "strategic sectors" impacted by tariffs and make the economy stronger and more resilient to economic shocks. The government’s strategy provides support as follows:

• Auto Industry — Pause the electric vehicle mandate for 2026 models, which had required a 20% target for vehicles to be zero-emission. An immediate 60-day review of the government’s EV mandate is underway.
• New Financing and Liquidity Relief — Support businesses by:
  • Introducing a new $5 billion Strategic Response Fund for all sectors impacted by tariffs to adapt, diversify and grow, including auto, steel, lumber, aluminum and copper.
  • Expanding Business Development Bank of Canada loans for small and medium-sized businesses (SMBs) to $5 million and provide flexible financing through the Large Enterprise Tariff Loan Facility.
• Buy Canada — Introduce a new procurement policy to ensure that all federal institutions buy from Canadian suppliers/use Canadian materials to maximize the economic benefits for Canadians (vs. foreign suppliers for short-term gain).
• Workforce: Introduce a new reskilling package for up to 50,000 affected workers that would make EI more flexible and extend benefits.
• Canola and Agriculture Producers: Introduce a new $370 million biofuel production incentive, along with amendments to Clean Fuel Regulations, to support canola producers, along with increased funding to the AgriMarketing Program to support market diversification.
• Regional Tariff Response Initiative: Expand support to SMBs to $1 billion over three years, with flexible terms, and increase new non-repayable contributions to eligible businesses impacted by tariffs, including agricultural and seafood. $80 million of the $1 billion will be dedicated to Atlantic Canada businesses most affected by tariffs including the seafood, manufacturing, and steel sectors.

The U.S. appeals court determined that President Donald Trump’s use of emergency legislation to impose tariffs on nearly all countries, including Canada, was illegal. The court also directed that the opinion be withheld until October 14, 2025. The Trump administration has since asked the U.S. Supreme Court to uphold U.S. global tariffs by expediting a review of the case. This decision does not affect tariffs imposed under separate legislative authority, including the Section 232 tariffs (steel/aluminum and automobile/auto parts) and Section 301 tariffs, which remain in force.

The U.S. issued an executive order exempting graphite, tungsten, uranium, gold bullion and other metals from its country-based tariffs. However, silicone products are still subject to the levies. These exemptions are part of a larger executive order, issued on September 5, 2025, which identifies more than 45 categories for zero import tariffs from “aligned partners” who were successful in negotiating framework pacts to reduce “reciprocal” tariffs and duties imposed under the Section 232 national security statute. The executive order does not apply to Canada, since Canada and the U.S. have not yet negotiated a framework deal. The exempted tariffs cover items that "cannot be grown, mined, or naturally produced in the United States" or produced in sufficient volume to meet domestic demand and also “creates new carveouts for some agricultural products, aircraft and parts, and non-patented articles for use in pharmaceuticals.” These exemptions went into effect on September 8, 2025.

August 25, 2025

On August 25th, Prime Minister Carney and the Prime Minister of Poland, Donald Tusk, announced they will enhance the Canada-Poland strategic partnership across trade, defence, and energy security – investing in key sectors, such as clean energy, including nuclear, critical minerals, defence, aviation, cybersecurity, and advanced technologies. Poland is one of the fastest-growing economies in the European Union and Canada’s largest trading partner in Central and Eastern Europe.

On August 22nd, Prime Minister Carney announced the removal of Canadian retaliatory tariffs on imports of U.S. goods covered under CUSMA, effective September 1, 2025. However, Prime Minister Carney advised that Canadian retaliatory tariffs will remain in place for imports of U.S. aluminum, steel and automobiles.

On August 22nd, President Donald Trump announced he has directed his administration to investigate imports of furniture into the United States that will lead to higher tariffs by October. President Trump said “within the next 50 days, the Investigation will be completed, and furniture coming from other countries into the United States will be tariffed at a rate yet to be determined.”

On August 15th, the U.S. Bureau of Industry and Security (BIS) of the Department of Commerce announced the addition of 407 Harmonized Tariff Schedule of the U.S. (HTSUS) codes to the list of products that are now considered as steel or aluminum derivative products under Section 232 of the Trade Expansion Act of 1962. These products are now subject to steel and aluminum tariffs based on their respective content starting August 18, 2025, while non-steel and non-aluminum components remain subject to other applicable tariffs.

August 15, 2025

On August 13, the Ontario government announced new tariff relief measures designed for businesses in sectors hit hardest by tariffs (Sec. 232 tariffs). The tariff relief measures include allocating $1 billion for emergency loan support for businesses in Ontario’s steel, aluminum, and automotive sectors. Businesses in these impacted sectors (Sec. 232 tariffs) will be eligible “only after they have exhausted all federal tariffs support programs,” and must have a minimum of 10 employees and minimum annual revenues of $2 million.

On August 12, China announced it would impose a 75.8% tariff on Canadian canola imports, effective Thursday, August 14.

On August 11, the U.S. government and the government of China agreed to suspend any further retaliatory action for a period of 90 days until November 10th, 2025. During this time, the existing 10% reciprocal tariffs and other U.S. tariff measures with respect to China will remain in effect.

On August 5, Prime Minister Carney announced measures (totaling $1.25 billion) to support Canada’s lumber industry. Mr. Carney positioned the announcement as a part of a new industrial strategy to “help Canadian industries compete in this tough environment.” In response to Canada-U.S. trade negotiations, Mr. Carney stated that currently “85% of our trade with the U.S. is tariff-free” under CUSMA. He continued that “we are in the midst of negotiating with the U.S.” and suggested that, due to CUSMA, “Canada is in the best position at this time.”

On July 31st, U.S. President Donald Trump signed an executive order3 to increase the tariff on Canadian goods (excluding goods that fall under CUSMA) to 35% effective August 1st. Sectoral goods, such as steel, aluminum and copper are not shielded by the CUSMA and attract the full tariff rates in place.

On July 31, President Donald Trump said he would not raise U.S. tariffs on Mexican goods beyond their current levels for 90 days.

July 29, 2025

As the impending trade deadline for Canada and the United States nears, negotiations remain unresolved. The Canadian government has indicated that a breakthrough may not be reached before the trade deadline, while the United States has signaled that it may impose additional tariffs on August 1 if no agreement is reached.

As a reminder, Canada continues to be subject to 50% U.S. tariffs on steel and aluminum imported into the United States since June 4, 2025. In response, the Canadian government has recently announced several measures aimed at safeguarding these important industries and their workers, including:

• Introducing a new surtax and tariff rate quotas (TRQs) for free trade agreement countries: Canada is introducing TRQs that will apply on steel imported from free trade agreement countries (except for the United States and Mexico) effective August 1, 2025. The surtax rate is set to 50%, while the TRQs is set to 100% of the 2024 levels. As such, the 50% surtax will apply to steel imports from free trade agreement countries above 100% of the 2024 levels.
• Reducing TRQs for non-free trade agreement countries: Canada is reducing the TRQs set on June 27, 2025 for steel imported from non-free trade agreement countries to 50% (from 100%) of 2024 levels. As such, the current 50% surtax will apply to steel imports from non-free trade agreement countries above 50% of the 2024 levels.
• Introducing a new 25% “Melt and Pour” surtax: Canada is introducing a new 25% surtax on imports that contain steel melted and poured in China from all countries other than the U.S.

In a letter to Prime Minister Carney dated July 10, 2025, President Trump proposes to apply a 35% tariff on imported “Canadian products” effective August 1, 2025.

The United States announced its intention to impose a new 50% tariff on imported copper effective August 1, 2025. This new tariff could have a significant impact on the Canadian copper industry, as well as on global trade dynamics.

The United States also suggested that it plans to impose a tariff of approximately 200% on pharmaceutical imports into the United States that could potentially take effect in a year.

Trade negotiations between Canada and the United States continue following Canada’s announcement on June 29, 2025 that it plans to rescind the Digital Services Tax (DST). The CRA has confirmed that companies who paid DST prior to the June 30 filing deadline must wait for Parliament to pass legislation revoking the tax before receiving refunds. In the meantime, the CRA has waived filing requirements and will not collect further payments. Canada announced the changes to the DST to resume trade negotiations with the United States, and to work toward a deal by July 21. Read more in our TaxNewsFlash.

President Trump has extended the application of the reduced reciprocal tariff rates to August 1, 2025 (from July 9, 2025). These tariff rates, which apply to many countries, are expected to change for some jurisdictions on August 1, 2025. Many countries have already been informed of their new reciprocal tariff rates, including Japan and South Korea.

President Trump is also considering an extra 10% tariff for countries that are seen as aligned with the “anti-American policies” of the “BRICS” group of countries, which includes Brazil, Russia, India, China and South Africa.

As a reminder, President Trump signed “The One Big Beautiful Bill” into law on July 4th, 2025. Read more in our TaxNewsFlash.

Canada is taking steps to protect its steel and aluminum industries with plans to “adjust counter-tariffs” on steel and aluminum products on July 21, aligning with the 30-day trade deadline agreed upon at the G7 summit. The unspecified adjusted tariff rate would be at a level “consistent” with the progress of trade negotiations. Detailed measures include:

• Limiting federal procurement policies to favour Canadian suppliers and “reliable trading partners” by June 30
• Limiting the amount of steel that enters Canada and implementing retroactive quotas that will apply to all non-free trade countries
• Adopting additional tariffs over the coming weeks to address global overcapacity and unfair trade in the steel and aluminum sectors
  

These steps, along with the newly established trade deadline aim to protect Canadian workers and industries from excessive global production and inequitable trade practices.