The United States is by far Canada’s largest trading partner: a large share of Canadian exports head south. As a result, a trade decision made in Washington — a tariff, a renegotiation — quickly ripples through Canada’s economy, and often through your wallet. Here is a clear guide to how it works.

What is CUSMA?

The Canada–United States–Mexico Agreement (CUSMA/USMCA, or ACEUM in French) is the free-trade deal that replaced NAFTA. It governs most trade among the three countries and includes periodic review mechanisms — key moments when the rules can be reopened.

Why tariffs matter

A tariff is a tax on imported goods. When a country imposes tariffs, it can raise prices for consumers, disrupt supply chains, reduce the competitiveness of exporters, and trigger retaliation. That is why any increase in U.S. tariffs is watched closely on both sides of the border.

The most exposed Canadian sectors

• Automotive — highly integrated production lines across the border.
• Steel and aluminum — frequent tariff targets.
• Energy — oil, gas and electricity exported to the U.S. market.
• Agriculture and food — dairy, meat, grains.
• Softwood lumber — a recurring trade dispute.

The impact on your wallet

In practical terms, trade tensions can mean higher prices on some goods, effects on jobs in exposed sectors, and swings in the Canadian dollar that influence the cost of imports and travel.

What businesses and consumers can do

Businesses can diversify markets and suppliers and track rules of origin closely. Consumers can compare prices, consider local products, and stay informed of official announcements.

What to watch

CUSMA reviews, any new tariff announcement from the U.S. administration, potential Canadian retaliation, and moves in the exchange rate. Follow our United States section, along with Economy and Canada, for updates.

Sources: Government of Canada (Global Affairs Canada), Bank of Canada.