A recent report indicates that Canada may benefit from the current U.S. tariff landscape, which imposes the lowest rates on Canadian exports compared to other trading nations. According to Oxford Economics Group Ltd., the effective tariff rate on Canadian goods is 2.5 percent. This rate is lower than Mexico's 4 percent and significantly less than tariffs on other major trading partners, such as 35 percent on China, 15 percent on Japan, 13 percent on South Korea, and 8 percent on the United Kingdom and the European Union.

Adam Slater, lead economist at Oxford Economics, noted, "If the relatively low tariffs apparently being paid on imports from Mexico and Canada persist, these two economies could pick up some benefits from shifts in supply chains, although uncertainties over the endgame for tariffs and the future of the Canada-United States-Mexico Agreement (CUSMA) will be near-term drags."

Goods compliant with CUSMA are exempt from U.S. tariffs. However, the agreement is set for review in July 2026, and some officials, including Ontario Premier Doug Ford, believe this timeline could be moved up. Slater described the current tariff estimates as "something of a puzzle."

Data from the U.S. Census Bureau shows that 56 percent of goods entering the U.S. from Canada and 47 percent from Mexico are compliant with CUSMA. Other data suggests compliance rates could be as high as 91 percent for Canada and 84 percent for Mexico. Slater remarked, "It may be the case that tariff exemptions for these economies are broader than assumed."

Despite the lower tariff rates, trade between the U.S. and Canada has faced challenges. Slater reported that imports into Canada have decreased by 25 percent since January. In contrast, imports from China have dropped by 50 percent during the same period. He added that Chinese exports to the U.S. have seen a less severe decline of about 25 percent, possibly due to rerouting through other countries.

In Canada, tariffs of 50 percent on aluminum and steel exports to the U.S. remain in place, along with 25 percent tariffs on non-U.S. components of vehicles. Recently, the U.S. increased tariffs on non-CUSMA-compliant goods from 25 percent to 35 percent and raised tariffs on softwood lumber to 35 percent.

The report also highlights a concerning trend in global trade. Slater stated, "A variety of indicators suggest that world trade is weakening," noting that global imports slowed by 3 percent in April and May. An International Monetary Fund port tracker indicated that growth in international exports has fallen to less than 1 percent.

Oxford estimates that world trade volumes shrank by about 3 percent from the first to the second quarter of 2026, marking the weakest performance in four years since the early 1980s recession. The organization has revised its global gross domestic product estimate down to 2.5 percent, a historically low figure, from 2.9 percent at the beginning of the year.