OTTAWA — Prime Minister Mark Carney’s assertion that 85 per cent of Canada’s trade with the U.S. is “tariff-free” is technically correct — but it doesn’t tell the full story of how Donald Trump’s sweeping tariffs are hitting Canadian exporters.
Speaking in Trenton, Ont., on Friday, Carney pointed to the figure as evidence of Canada’s resilience in the face of a growing trade war. In reality, the number refers to Canadian exports that could qualify for duty-free treatment under the Canada-U.S.-Mexico Agreement (CUSMA), not those that actually do.
Data from the U.S. Census Bureau shows that last year only about 38 per cent of U.S. imports from Canada were traded under CUSMA rules, meaning many exporters are still paying steep tariffs. For smaller businesses, the complex and costly process of proving CUSMA compliance — meeting strict rules of origin and certification requirements — has proven to be a major barrier.
“We saw our orders dry up literally overnight,” said Steve Mallia, owner of Toronto-based Starfield Optics, who is now navigating the paperwork to qualify for CUSMA benefits. “The little guy is being forgotten by the Canadian government during the trade war.”
Some small firms are opting to absorb tariffs or pass costs on to customers rather than pursue relief through Canada’s remission program, according to the Canadian Federation of Independent Business.
While Carney has pledged to target retaliatory tariffs in ways that hit the U.S. harder than Canada, the trade war is already taking a toll. Tyler Meredith, a former Trudeau-era economic adviser, warns that Canada’s heavy reliance on U.S. trade means the country will “disproportionately bear” the costs if overall trade continues to decline.
Canada remains Washington’s second-largest trading partner, giving Carney little room to manoeuvre as he tries to balance toughness with maintaining a critical economic relationship.