USMCA still binds Canada, Mexico and the United States into one production region. New tariffs show where that free-trade shield now has holes—and which local economies have the most at stake.
01 — One agreement, different borders
USMCA remains the legal foundation of continental trade. But origin rules no longer answer the whole tariff question: selected Canadian goods face a new duty even when they qualify under the agreement, Mexico retains broad preferential access, and Canada is preparing a matched response.
Selected Canadian goods face an additional Section 338 duty even when they originate under USMCA. Canada describes the affected trade as C$27.6 billion; the U.S. describes it as nearly US$20 billion.
In effect · Aug. 22Mexico says more than four-fifths of its exports continue to enter the U.S. without tariffs under USMCA. Sector-specific measures and origin tests still matter, especially for autos, steel and aluminum.
Current government estimateCanada has announced matched tariffs on C$27.6 billion of U.S. goods, including steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics.
Announced · effective Sept. 8These percentages describe different policy scopes and should not be compared as though they were the same denominator. The Canadian routes refer to selected product lists; Mexico’s figure refers to the share of total exports qualifying for tariff-free treatment.
Policy status as of August 28, 2026. Sources: White House, Department of Finance Canada, and Mexico’s Secretariat of Economy. Tariff eligibility is product- and origin-specific; this is a policy overview, not customs advice.
02 — The first shock
The break appears immediately after the spring 2025 tariff escalation. By February 2026, Canada’s exports to the U.S. remained below their January 2024 level while exports elsewhere were more than 50% above it. Some of that apparent diversification, however, was a precious-metals surge.
Monthly merchandise export value index, January 2024 = 100, customs basis; values are nominal and seasonally unadjusted. Annual changes refer to domestic exports. Source: Statistics Canada, Recent developments in the Canadian economy: Spring 2026, using tables 12-10-0011-01 and 12-10-0182-01. The timing is consistent with a tariff shock but does not prove tariffs caused every movement.
03 — The local stakes
National totals flatten the geography. In 2025, nine out of every ten export dollars leaving North Dakota went to Canada or Mexico. Michigan sent two-thirds of its exports to its North American partners. In New Mexico, the relationship ran almost entirely south.
Share of 2025 U.S. state merchandise exports going to Canada and Mexico. Ranking includes states with at least US$5 billion in total exports; displayed shares are calculated from unrounded values. Source: U.S. Census Bureau State Exports NAICS, December 2025. We summed year-to-date values across four-digit NAICS industries and partner countries. “Origin of movement” identifies where a shipment began its export journey, not necessarily where it was produced; state trade balances should not be inferred.
04 — The physical economy
Tariffs move through infrastructure. Mexico’s border is overwhelmingly a trucking system. Canada’s is more distributed: trucks still dominate, but pipelines and rail together carry another quarter of the value. A disruption therefore travels through different industries, crossings and timetables.
| Transport mode | Canada border | Mexico border |
|---|
Share of freight value by transport mode, 2025. “Other” combines air, foreign-trade zones, other or unknown modes, and mail. Source: U.S. Bureau of Transportation Statistics, TransBorder Freight Data Annual Report: 2025. Values cover freight moved across U.S. land borders and differ from broader national goods-and-services trade totals.
05 — What survives
The 2026 review was not an expiry cliff: the agreement remains in force through 2036. But the path from one review to the next now includes annual bargaining, stronger origin demands and tariff powers operating beside—or above—the agreement.
Most continental tariffs start disappearing.
New origin, labour and digital-trade rules take effect.
Broad and sectoral duties reshape Canada–U.S. trade.
Annual reviews begin as new Canadian duties and counter-duties arrive.
The pact continues until then unless the parties extend it earlier.
North America has not stopped being integrated. That is precisely why selective tariffs travel so far: the border is no longer just a line between countries. It runs through factories, freight corridors and local export markets.
Sources: Government of Canada, CUSMA Joint Review, and Mexico’s Secretariat of Economy, July 1, 2026. Future reviews and policy actions can change this timeline.