The White House initially indicated that a 10% tariff would apply to Canada and Mexico, suggesting a tariff increase. However, they later clarified that this rate does not apply to Canada, confirming previous conditions remain unchanged.
The USMCA region retains its previous tariff structure: no tariffs on USMCA-compliant goods and a 25% tariff on non-compliant goods. Additional tariffs exist for steel, aluminium, and automobiles, with a delay on parts. Overall, there have been no alterations in the tariff situation for Canada and Mexico.
Trade Conditions Remain Steady
What this indicates is that, despite initial warnings of a blanket 10% tariff across all parties, trade conditions between the three countries under the existing agreement remain steady. That earlier messaging sparked concern, but the White House reversed course by preserving the prior structure. For goods that fall within the requirements of the agreement—those sourced and manufactured in compliance—tariffs stay at zero. If products fail to meet those rules, a 25% charge still applies, just as it did before.
Steel and aluminium are a different matter. Those industries remain subject to earlier duties that were introduced separately from the broader agreement. The automotive sector still faces similar treatment. Completed vehicles manufactured outside of compliance attract charges, while an official delay on tariffs related to automotive parts is still in place, offering more time for planning.
From our perspective, this tells us that the regulatory framework remains predictable for now. No new trade barriers have been added in this region, so positions already taken based on the tariff status can stand without adjustment. Forward pricing models should continue using current duty levels for US-Canada and US-Mexico flows.
Impact Of Misinformation
Misinformation can be a fast-moving variable. The initial tariff suggestion, even though temporary, influenced short-term market sentiment and possibly liquidity in a few contracts. That shift—though now reversed—highlighted how fast policy language can affect implied volatility. Given how that moment unfolded, we should assume more speculative statements from US policymakers may surface again. Whether they stick or not is a separate matter, but they can influence pricing before any actual decision is made.
Ross confirmed the unchanged conditions, which supports the idea that the current trade route remains valid and available. For that to be the case moving forward, however, it would make sense to monitor upcoming statements for potential gaps between language and enactment. We now know provisional claims can shift in a matter of hours.
This latest sequence reminds us not to overreact, but also not to ignore early signals. When firm clarification follows initial noise, spreads can revert quickly—and with them, risk exposure returns to prior positioning. If that pattern repeats, temporary dislocations may appear again in futures volumes or short expiration option chains tied to freight-sensitive commodities. We already saw hints of that early last week.
Because there’s no update to the charge on non-compliant goods, those who hedge exposure against that 25% figure should keep those assumptions intact. Nothing suggests those charges will be lifted or amended soon.
It’s also worth treating the automotive delay with caution. Although currently stalled, deadlines can be reintroduced. That holding pattern calls for closer attention to finished vehicle imports versus their parts, especially when tracking long-dated option volatility.
We will keep using the same rules until they’re formally rewritten. But given the pace of policy communication swings, we’re treating comments as information to frame a probability window—not as fixed intentions.
Every time markets responded to language rather than policy, liquidity shifted. Taking a directional view too early after unclear headlines risks getting caught in a quick correction, like the recent about-face from the administration.
We find that staying anchored to the written terms helps, and letting speculative statements settle a little before adjusting exposure saves time and avoids second-guessing trades. Unchanged rules mean unchanged pricing assumptions—for now.
