Saskatchewan exports still mostly tariff-free under CUSMA: Moe

Saskatchewan Premier Scott Moe reiterated on Friday that 95 per cent of Saskatchewan’s exports to the United States will remain tariff free due to CUSMA compliance.

New U.S. tariffs on some Canadian goods such as steel, copper and forestry, took effect on Friday.

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The White House has said the tariffs won’t be applied to goods that are compliant with the Canada-U.S.-Mexico Agreement on trade.

“Canadian exports that remain tariff-free now have a competitive advantage relative to other countries that face tariffs on those same products,” Moe said in a news release Friday.

He added that the province will continue expanding its export markets to over 160 countries around the world.

Moe called on the federal government to adopt its “Strong Saskatchewan, Strong Canada Plan” which aims to remove regulations that prevent development for infrastructure projects like pipelines and rail lines.

During a news conference on Friday afternoon, Moe credited Dominic LeBlanc, the federal minister responsible for Canada-U.S. trade, for his work preserving the exemptions under CUSMA.

The premier said all of North America should be working towards a trade environment that includes either low tariffs or no tariffs, and encouraged Ottawa to rescind some of the counter tariffs it has put in place in response to tariffs from the United States.

“Any counter-tariffs that Prime Minister Carney or anyone puts on American goods… would then cost us more and do harm to the competitiveness of the Canadian economy,” Moe told reporters.

“We should be starting to look at how we lower any of the counter tariffs that we have in place, or remove any counter tariffs.”

Moe added that the rapidly changing trade relationship between the two countries calls for fact-based decisions, rather than decisions “that make us feel good.”

The premier also warned that the Canada-U.S. relationship could be affected by actions outside of the trade negotiations. U.S. President Donald Trump warned earlier this week that Canada’s decision to recognize a Palestinian state could put a damper on negotiations.

“We are in a relative world where what we do and what the president does as he resets trade relations… has an impact on us, directly and indirectly,” Moe added.

In the meantime, Moe said the opportunities for removing barriers around interprovincial trade under Bill C-5, also called the One Canadian Economy Act, remain the largest opportunity for advancing the nation’s economy.

What is CUSMA compliance?

CUSMA was negotiated during the first Trump administration to replace the North American Free Trade Agreement.

Companies can claim preferential treatment under CUSMA if they meet its rules of origin. While it is different depending on the product, generally it requires a specific amount of the goods be made of products or with labour originating from Canada, Mexico or the United States.

About 80 to 90 per cent of Canadian goods might be able to comply with CUSMA’s rules of origin, said Michael Dobner, the national leader of economics and policy practice at PricewaterhouseCoopers Canada.

Not all exporters have filed the necessary paperwork to avoid the duties.

There’s been an increase in businesses claiming preferential treatment under CUSMA but it’s not clear exactly how much of Canadian exports are currently compliant.

Are any industries more at risk?

Dobner said there’s no specific industry that he expects to be hit the hardest.

Certain companies may not be able to source input materials from North America to make their product. That means they would not be able to apply for preferential treatment under CUSMA and will face the 35 per cent tariff.

But Dobner said “it’s the minority of the exports of Canada to the U.S.”

What’s the impact on small and medium-sized businesses?

Small and medium-sized businesses may have not applied for CUSMA preferential status before Trump’s tariffs because the process can be burdensome for enterprises of that size.

Some small and medium-sized businesses might not meet CUSMA rules of origin requirements and don’t have the financial flexibility to change their inputs to North American products.

Dan Kelly, president and CEO of the Canadian Federation of Independent Business, said many of these businesses were absorbing some or all of the costs associated with Trump’s tariffs under the assumption that there would a resolution coming.

Kelly said some small and medium-sized businesses facing the 35 per cent tariff may have to stop selling into the United States.

–With files from The Canadian Press