The tariff rate imposed on Canadian exports by the United States is estimated to be the lowest amongst the world’s trading countries, meaning that Canada could end up coming out ahead in

Donald Trump ‘s trade war , a new report says. Oxford Economics Group Ltd. estimates the U.S.’s current effective tariff rate on Canada is 2.5 per cent, placing it below Mexico at four per cent and well below other major U.S. trading partners.

For example, the U.S. tariff rate is 35 per cent on China, 15 per cent on Japan, 13 per cent on South Korea and eight per cent on the United Kingdom and the European Union, based on data from calculated duties as a share of imports, Oxford said.

“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 ) will be near-term drags,” Adam Slater, lead economist at Oxford Economics, said in the report.

CUSMA-compliant goods escape U.S. tariffs, though the trade agreement is scheduled to be reviewed in July 2026, but some people, including Ontario Premier Doug Ford, think that deadline could be accelerated. The review also starts the clock ticking on the possible expiration of the agreement in 2036.

Still, Slater described the current estimates for the tariff rates “as something of a puzzle.”

One set of trade data from the U.S. Census Bureau — specifically labelled CUSMA — indicates that 56 per cent of goods entering the U.S. from Canada and 47 per cent from Mexico are compliant with the agreement.

Other Census Bureau data, based on rate provisions, suggests that 91 per cent and 84 per cent, respectively, are entering duty-free, though Oxford said it can’t tell if that is due to CUSMA compliance or “some other exemption.”

“It may be the case that tariff exemptions for these economies are broader than assumed,” Slater said.

Slater said Oxford based its overall 2.5 per cent tariff rate for Canada on a higher level of CUSMA compliance, “while not directly” adhering to the 91 per cent level.

But trade between the U.S. and Canada hasn’t escaped unscathed.

“The biggest negative impacts have been in Canada, where imports are down 25 per cent from January levels, and in China, where imports are down 50 per cent from January,” Slater said, adding that “Chinese data on exports to the U.S. shows a much less dramatic decline of around 25 per cent since January,” possibly due to rerouting of goods through other countries.

In Canada, 50 per cent tariffs on aluminum and steel exports to the U.S. persist, as do 25 per cent tariffs on the non-U.S. components of vehicles. Trump also recently hiked the tariff on non-CUSMA-compliant goods to 35 per cent from 25 per cent and announced an increased tariff on softwood lumber to 35 per cent.

Oxford’s report also warned that overall global trade is shrinking.

“A variety of indicators suggest that world trade is weakening,” Slater said, referencing various measures that indicated monthly global imports slowed three per cent in April and May, while an International Monetary Fund port tracker said growth in international exports declined to less than one per cent.

“Other sea and air freight indicators show similar trends,” he said.

Oxford is estimating that world trade volumes shrunk by about three per cent from the second quarter to the first quarter of 2026, with world trade posting its weakest performance in a four-year period since the recession of the early 1980s.

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It reduced its global gross domestic product estimate to 2.5 per cent — “historically on the low side” — to 2.8 per cent from 2.9 per cent at the beginning of the year, Slater said.