Knowledge Tree
USMCA
Also known as: U.S.-Mexico-Canada Agreement, United States–Mexico–Canada Agreement, United States-Mexico-Canada Agreement, US-Mexico-Canada Agreement
Facts (27)
Sources
Tariffs: Estimating the Economic Impact of the 2025 Measures and ... richmondfed.org Apr 2, 2025 7 facts
claimScenario 2 of the proposed 2025 tariff package includes a 20 percent tariff on all imports from China, a 25 percent tariff on aluminum and steel imports from all countries, and a 25 percent tariff on goods imported from Canada and Mexico not covered under the United States-Mexico-Canada Agreement (USMCA).
measurementThe Richmond Fed's 'Scenario 2' economic model adds 25 percent tariffs on goods imported from Canada and Mexico that are not covered under the USMCA, resulting in an overall Average Effective Tariff Rate (AETR) increase from 7.1 percent to 10.4 percent.
claimTariffs of 25 percent on goods imported from Canada and Mexico that are not subject to the United States-Mexico-Canada Agreement (USMCA) are scheduled to take effect in April 2025, alongside potential tariffs on automotive imports and goods from the European Union.
measurementThe most aggressive tariff package simulated by the Richmond Fed includes a 25 percent tariff on EU imports, 20 percent on Chinese imports, 25 percent on steel and aluminum, 25 percent on non-USMCA goods from Canada and Mexico, and 25 percent on auto imports.
claimThe Richmond Fed observes that while approximately half of imports from Canada and Mexico fall outside the scope of the USMCA, these goods do not constitute the most import-heavy segments of U.S. trade with those countries, leading to a more dispersed impact across sectors compared to the high-volume sector targeting in Scenario 1.
claimUnder the Richmond Fed's 'Scenario 2' tariff model, U.S. industries such as leather, apparel, and textile products face steep tariff increases due to their reliance on imports from China and USMCA partners in categories not covered by trade agreements.
measurementThe Richmond Fed's 'Scenario 2' tariff model assumes a 20 percent increase on all imports from China, a 25 percent increase on all aluminum and steel imports, and a 25 percent tariff on non-USMCA goods from Canada and Mexico relative to the benchmark case.
U.S. tariff outcomes dependent on trading partner responses dallasfed.org May 13, 2025 4 facts
accountIn March 2025, the U.S. applied a 25 percent tariff on goods from Canada and Mexico, which was later adjusted to exclude USMCA-compliant items.
claimRetaliation is not always self-defeating for United States–Mexico–Canada Agreement (USMCA) countries and may alleviate some losses from U.S. tariff hikes, due to their status as large, deeply integrated trading partners and the assumption of a coordinated global response.
measurementU.S. agricultural and food exports encountered high tariffs in Mexico and Canada, and tariffs exceeding 50 percent in China, despite USMCA exemptions.
claimDue to the North American Free Trade Agreement (NAFTA), updated to the USMCA in 2020, Canada and Mexico were largely exempt from the higher U.S. tariffs that existed prior to the 2018–19 trade war.
International Trade Agreements and U.S. Tariff Laws everycrsreport.com May 12, 2025 4 facts
accountIn 2022, a USMCA panel ruled in favor of Canada regarding its challenge to U.S. solar tariffs, leading Canada to reach a mutually agreed settlement with the United States.
accountThe Trump Administration has modified its 2025 tariffs by suspending duties on goods compliant with the USMCA and pausing country-specific tariffs on countries other than the People's Republic of China (PRC).
claimCanada and Mexico may argue that U.S. auto tariffs violate USMCA side letters that limit U.S. use of Section 232 against auto imports from those countries.
measurementThe United States is a party to 14 comprehensive Free Trade Agreements (FTAs) with 20 countries, including the 2020 U.S.-Mexico-Canada Agreement (USMCA).
GEO-LAC: The Future of U.S. Trade Policy and Its Implications for ... americas.georgetown.edu Nov 12, 2025 3 facts
claimEissenstat anticipates that the 2026 USMCA review might introduce significant updates in areas such as export controls, investment screening, and rules of origin designed to prevent tariff circumvention.
claimThe USMCA review could shift the agreement toward a security-oriented framework rather than a traditional market-integration project, provided that U.S. law is not amended, thereby avoiding the need for new congressional approval.
claimThe upcoming 2026 review of the United States-Mexico-Canada Agreement (USMCA) creates structural uncertainty that could discourage investment if the United States, Mexico, and Canada do not affirm the agreement's continuation.
Tracking Trump's Trade Deals | Council on Foreign Relations cfr.org Mar 17, 2026 2 facts
claimWhile Canada and Mexico receive reciprocal tariff exemptions under the U.S.-Mexico-Canada Agreement (USMCA), neither country had a framework or reciprocal trade agreement on top of their existing Free Trade Agreement as of January 2026.
claimProducts from Canada and Mexico that comply with the U.S.-Mexico-Canada Agreement, as well as apparel and textiles originating from CAFTA-DR countries (Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua), are exempt from Section 122 tariffs.
Why the US and the WTO should part ways - CEPR cepr.org Jun 25, 2025 2 facts
claimPresident Trump intends to renegotiate the USMCA and is signing non-binding deals with countries to avoid new US tariffs.
claimThe USMCA, negotiated under the first Trump administration as the successor to NAFTA, involved a watering down of US commitments compared to the original NAFTA agreement.
How Tariffs Are Reshaping Global Supply Chains in 2025 supplychainbrain.com Jun 25, 2025 1 fact
claimThe United States-Mexico-Canada Agreement (USMCA) facilitates duty-free trade between the United States, Mexico, and Canada, which encourages nearshoring of supply chains.
Policy Paper: Decoding the United States on Tariffs and Trade freiheit.org Dec 16, 2025 1 fact
claimBusinesses are responding to tariffs by increasing their use of international treaties, evidenced by a steep increase in Canadian exports to the United States under the United States-Mexico-Canada Agreement.
Academic Paper: The Future of Trade Wars in Trump's Foreign Policy eng.alzaytouna.net Jun 2, 2025 1 fact
measurementApplying 25% tariffs on imports from Canada and Mexico that fall outside the US-Mexico-Canada Agreement coverage raises the average effective tariff rate (AETR) to 10.4%.
A tectonic shift in tariff policy | UN Trade and Development (UNCTAD) unctad.org Sep 17, 2025 1 fact
claimThe United States introduced additional tariffs of 25% on goods from Mexico and 35% on goods from Canada that do not meet the US-Mexico-Canada Agreement (USMCA) rules of origin, with some lower rates applied to energy-related goods and potash.
Tariffs are a particularly bad way to raise revenue | Brookings brookings.edu Nov 4, 2025 1 fact
measurementAs of August, the effective tariff rate in the United States is closer to 10.5 percent due to exemptions and zero-tariff trade agreements such as the U.S.-Mexico-Canada Agreement.