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New U.S., Mexico and Canada trade agreement on the way, but some concerns remain

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After months of uncertainty for business owners, Canada and the U.S. have reached a tentative agreement on a new North American Free Trade Agreement (NAFTA) deal. The newly renamed United States-Mexico-Canada Agreement (USMCA) will provide more certainty to some businesses, but there are still many worries in certain sectors. See our press release here.

Some good news

New small business chapter: the updated agreement includes a chapter focused on small and medium-sized enterprises! We’re happy to see that the agreement will now includes language that commits to helping small businesses like yours engage in cross-border trade. Read our press release on the small business chapter for more.

Concerns for your business

Concessions on dairy: the dairy industry will see U.S. competitors gain greater access to the Canadian market as Canada will allow 3.59% more dairy imports. Class 7 for diafiltered milk has been eliminated, meaning that Canadian dairy processors will have to pay a higher price for ingredients.  

The Canadian government has announced that it will provide producers with compensation and that it will consult with industry on how best to do so.

We are calling on government to provide businesses in this sector with a detailed transition plan, clarity on what compensation will be offered, and assurances that relief measures will work for smaller producers.

Higher de minimis: the de minimis (the amount a consumer can import into Canada without having to pay taxes or duty) will be increased from $20 to $150 for duties on online purchases, and from $20 to $40 before applying sales tax. 

We are concerned that Canadian retail businesses will be at a greater competitive disadvantage with this increase, as they must charge sales tax on every dollar and are already struggling with growing competition from e-commerce. We will be asking government to provide stronger enforcement of the rules by Canada Post and work with smaller retailers on implementing other relief measures. 

Next steps

Before the USMCA comes into effect, federal governments in all three countries must officially ratify the agreement.

While steel and aluminum tariffs and all retaliatory measures remain in place for now, we are calling on both the Canadian and American governments to eliminate them as soon as possible given the new agreement.

If your business has concerns about the impact of the new agreement, please contact your Business Counsellor to share your story. We will ensure your concerns are passed on to government officials.

Steel and aluminium tariffs

On June 1, U.S. President Donald Trump imposed steel and aluminium tariffs on Canada, Mexico and the European Union — 25% on steel and 10% on aluminum. In response, the Canadian government announced its own tariffs that were imposed on July 1 on American steel and aluminium, as well as several other products from the U.S. (see full list here). The government says these countermeasures will remain in place until the U.S. withdraws its tariffs on Canadian steel and aluminium products.

On June 29, the government announced that it would provide up to $2 billion in new measures aimed at supporting businesses and workers in the steel, aluminum and manufacturing industries. You can find a description of the available programs, grants and other measures.

Under the new agreement announced October 1, these tariffs will continue. You can continue to direct your American trading partners to www.savefreetrade.com where they can contact their elected officials to urge them to eliminate these tariffs. 

The softwood lumber dispute continues

In November 2017, the U.S. government announced that it would place duties ranging from 3% to 14% on Canadian lumber imports. Although not as penalizing as announced previously, the duties will still weight heavily on the Canadian forestry industry. The federal government immediately released a statement calling the duties "unfair, unwarranted and deeply troubling," and pledging to fight the decision.

For background: On June 1, 2017, the government announced $867 million in measures to support forest industry workers and communities affected by U.S. measures targeting softwood lumber. This was later followed with preliminary anti-dumping duties on Canadian softwood lumber on June 23, 2017. See government Backgrounder on Softwood Lumber Action Plan for more information.

How we’re fighting for you

We have been meeting with MPs, Ministers and bureaucrats throughout the federal and provincial governments to discuss your perspective on this important issue. We have also been working closely with Global Affairs Canada, and the Canadian Trade Commissioner Service and sharing your feedback directly with government, including by participating in consultations.

We want to hear from you!

We are keeping a close eye on how the new deal is implemented, as well as the ongoing tariffs issue, and will inform you of any change along the way. We are working hard to ensure that we continue to represent your views on trade with our southern neighbours. 

If your business imports from or exports to the U.S. and you are concerned about NAFTA negotiations or the tariffs, we want to hear your stories!

Call your CFIB counsellor to let us know how Canada-U.S. trade issues are impacting your business. We will sharing your stories and concerns with officials in Canada and the U.S. to urge them to quickly find solutions. Our counsellors have also prepared guides for independent businesses on exporting goods and services, and importing into Canada.