Mexico, Canada Face Tariff Hikes Amid USMCA Exemption

President Trump has announced a plan to impose 30% tariffs on imports from Mexico and 35% tariffs on imports from Canada starting on August 1. These tariffs could affect a significant portion of imports from the United States' top two trade partners.

The automotive and fruit and vegetable industries are expected to be particularly impacted by these tariffs. There is a possibility that Mexico and Canada may retaliate, which could harm U.S. exporters as these two countries account for over 30% of U.S. exports.

While some imports are exempt from the tariffs, a large percentage of imports from Mexico and Canada are not compliant with the USMCA agreement. Compliance rates have dropped significantly from the previous year due to increased scrutiny from Customs and Border Protection.

The implementation of these tariffs is uncertain, given the history of announcements, retreats, and pauses in Trump's tariff policies. The lack of completed agreements and the ongoing tariff disputes could have far-reaching effects on trade relationships with Mexico and Canada.

The compliance rates for duty-free entry of imports from Mexico and Canada have decreased in recent years. Importers have found the additional paperwork required for compliance not worth the effort, leading to a decline in compliance rates.

The potential impact of these high tariffs on key sectors such as automotive and produce industries in Mexico and Canada remains a concern. Compliance rates for various imports have dropped significantly, indicating potential challenges for these sectors if the tariffs are implemented as planned.