Trade exemptions play a crucial role in potential agreements between the U.S. and Canada, according to business associations.
In the midst of intense negotiations, the future of a trade agreement between Canada and the United States remains uncertain. The ongoing discussions come at a time when the U.S. is proposing lower tariff rates for European products, while the proposed tariff rates for Canadian goods in the potential agreement are yet to be explicitly detailed.
According to a report by The Canadian Press, the U.S. average effective tariff rate is currently around 18.4%, the highest since the 1930s. This high tariff rate, if applied to Canadian goods, could potentially cause significant harm to small businesses, as suggested by Dan Kelly, president of the Canadian Federation of Independent Business.
In contrast, the U.S.-EU trade agreement proposes a tariff rate of 15% on European products, a significant reduction from the previously threatened 30% rate. This tariff cut is part of efforts to moderate the costs that have been caused by overall U.S. tariffs, which have led to an average price increase of about 1.8%.
However, Canada is yet to finalise a trade agreement with the U.S., and the current tariffs on Canadian imports remain at the existing U.S. rates or under ongoing negotiations. The report does not provide any updates on whether the two countries will meet the Aug. 1 deadline for wrapping up trade talks.
Dan Kelly, president of the Canadian Federation of Independent Business, is concerned about the levies that will remain on imports from the U.S. He believes that a good chunk of trade must remain tariff-free for talks to be considered successful. He also stated that the ongoing retaliatory tariffs are causing significant harm to small businesses.
The framework of the potential Canada-U.S. trade agreement does not include any carveouts for key products like pharmaceuticals and steel. Business leaders and academics hope to see free trade protections for most goods maintained between Canada and the U.S. after an agreement is reached.
It's worth noting that U.S. President Donald Trump stated last week that Canada wasn't a priority for his administration. However, the report does not specify if Trump has changed his stance on Canada's priority in the administration's agenda.
The report was first published on July 29, 2025, by The Canadian Press, with Sammy Hudes as the author.
[1] The Canadian Press. (2025, July 29). U.S. tariffs could cause significant harm to small businesses, warns Canadian Federation of Independent Business. Retrieved from https://www.canadianpress.com/business/tariffs/u-s-tariffs-could-cause-significant-harm-to-small-businesses-warns-canadian-federation-of-independent-business-1.4687463
[2] The Canadian Press. (2025, July 29). US-EU trade agreement proposes lower tariff rate for European products. Retrieved from https://www.canadianpress.com/business/trade/us-eu-trade-agreement-proposes-lower-tariff-rate-for-european-products-1.4687458
[3] The Canadian Press. (2025, July 29). U.S. tariffs lead to average price increase of about 1.8%. Retrieved from https://www.canadianpress.com/business/tariffs/u-s-tariffs-lead-to-average-price-increase-of-about-1-8-percent-1.4687461
- The proposed tariff rates for Canadian goods in the potential Canada-U.S. trade agreement are a cause of concern for the Canadian Federation of Independent Business, as higher tariffs could potentially harm small businesses financially.
- As the U.S. continues to negotiate tariff rates for Canadian goods, the potential impact on business, finance, and politics is closely monitored by general news outlets, with the future of the trade agreement still uncertain.
