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On April 29th, 2025, the United States administration announced a series of domestic credits for up to 15% of the value of vehicles assembled within the United States. These credits could then be applied against the value of import tariffs.

The White House’s fact sheet provides the following example: “If a manufacturer builds a car in the U.S. that has 85% U.S. or USMCA content, the manufacturer effectively will not owe tariffs on that vehicle’s production for the first year.” In the short term, this would provide some incentive for U.S. automakers to continue importing parts from Canada. However, the long-term motivation behind this strategy was to provide U.S. auto manufacturers with additional time to shift parts manufacturing to the United States.

An April 29, 2025, executive order offered clarity concerning tariff stacking. Local manufacturers have consistently expressed concerns to Economic Development staff that if tariffs stacked, that is, if steel exports and automobile parts exports had a cumulative tariff, it would have an immediate and detrimental impact on business conditions. The new executive order stated that “to the extent these tariffs apply to the same article, these tariffs should not all have a cumulative effect.”

May 1, 2025, saw another major policy shift as the United States Customs and Border Protection’s Cargo Messaging Service released guidance that revised the anticipated 25% tariff on automobile parts. Notably, parts “eligible for special tariff treatment under the United States-Mexico-Canada Agreement, other than automobile knock-down kits or parts compilation” will be exempt from the 25% tariff.

Finally, on May 2, 2025, the United States ended the “de minimis” exception to small packages valued at less than $800 shipped into the United States. The move, which is largely expected to impact e-commerce companies shipping global goods into the United States, is already triggering global reactions. Hamilton residents, and indeed all Canadians, who are buying goods from e-retailers that ship through the United States should expect cost increases.

As the current automotive trade policy with the United States rests upon compliance with the Canada-United States-Mexico Agreement, the Federal Trade Commissioner Service published a comprehensive guide on understanding CUSMA Compliance and a step-by-step process for meeting it.

Fundamental to this process is an understanding that Canadian goods must be certified as compliant with CUSMA rules by the exporter, and that US importers must claim the preference to benefit from the duty-free treatment. The Trade Commissioner Service’s website notes that over 98% of tariff lines and over 99.9% of bilateral trade between Canada and the United States can claim preference under CUSMA if they meet the agreement’s rules of origin.

Pending high-level trade discussions between Prime Minister Mark Carney and the United States administration, Canada has entered a wait-and-see phase regarding new trade policies. However, as of Friday morning, the impacts of the existing policies have made themselves clear, with General Motors laying off an estimated 700 people from Oshawa’s assembly plant.

As businesses and the investment community wait to learn more, the provincial and federal governments recently announced a suite of new programs and opportunities that support counter-tariff remissions for essential industries and begin to open Canada up to stronger inter-provincial trade. Information on these programs can be accessed through this link.

Economic Development staff are, as always, standing by to assist with any questions or concerns facing your business. Please connect with us through this link.