Like a lazy student the night before a test, Canadian companies are cramming to get up to speed on something they’ve probably never read.
Driving the news: Businesses are scrambling to comply with the Canada-United States-Mexico Agreement (CUSMA, also known as USMCA), the free trade deal that has become a crucial shield against sweeping U.S. tariffs.
- International trade consultant Charmaine Goddeeris told The Canadian Press that she’s had ~2,000 calls from exporters asking about CUSMA certification and cross-border trade in the past two months alone.
Catch-up: The main barrier to becoming CUSMA compliant is the country-of-origin rules that require most exported goods to be made up of 50% to 75% North American materials (with some exceptions for products made from raw materials abroad but transformed here).
Why it matters: Before Trump started tariff-geddon this year, Canadian companies didn’t need to be CUSMA-compliant because they enjoyed essentially free trade with the U.S. anyway. Now, getting their products (and paperwork) up to code is the only way for most of them to avoid a 25% tariff.
- For some companies in industries like tech or pharmaceuticals, overhauling supply chains to become CUSMA-compliant isn’t feasible.
Bottom line: Fewer than 40% of Canadian goods sent to the States last year were certified compliant, but experts say the majority of Canadian exports to the U.S. could become CUSMA-compliant pretty easily.—LA