Recent reports suggest that tariffs on Canada and Mexico may be lower than initially expected. Canada is likely to experience the lowest end of tariffs, with a similar situation for Mexico due to their shared trade agreement.
Recent information indicates that VAT taxes and non-tariff barriers may not significantly impact tariff rates. Consequently, effective tariffs on US goods entering Canada stand at 1.1%, with minimal differences for Mexico.
Negotiation Strategies
There is concern that the proposed 25% threat may create a basis for negotiating higher tariffs. This strategy, labelled ‘escalate to de-escalate’, could also apply to trade discussions with Europe.
While European tariff rates on US goods are higher, potential negotiations could lead to lower rates. Conversely, the situation with China remains complex, as current expectations for tariffs are set around 50%.
Agricultural tariffs remain a contentious issue, as the US subsidises its farmers significantly. It is yet to be determined whether these subsidies will be considered separately or collectively in tariff discussions.
Reports suggest that duties on imports from Canada and Mexico may not be as high as first thought. Canada appears to be facing the lightest tariffs, with Mexico in a comparable position due to their shared economic agreements.
Further updates indicate that value-added taxes and regulatory trade barriers are unlikely to have much influence on final tariff levels. As a result, goods shipped from the United States into Canada are currently subject to an average duty of around 1.1%, with Mexico following a nearly identical pattern.
There is concern that the widely discussed 25% duty threat might serve as a bargaining tool to justify more restrictive trade measures. This form of negotiation, often referred to as ‘escalate to de-escalate’, has been increasingly used in diplomatic trade manoeuvres. A similar approach may be unfolding in discussions between the US and the European Union.
Compared to North American partners, Europe generally imposes steeper charges on goods originating from the US. If negotiations move forward, there is potential for adjustments to reduce these figures. Meanwhile, the situation with Beijing remains far more entrenched, with expectations for upcoming import duties still hovering around 50%.
Agricultural Concerns
Agriculture remains a pressing concern, largely due to the extensive financial assistance provided to American farmers. At present, it is uncertain whether these subsidies will be handled as a separate matter or bundled into broader tariff discussions.
