USMCA talks open as tariffs loom over North America

By Brett Rowland
The Center Square

A top U.S. trade official heads to Mexico on Thursday for talks expected to keep tariffs at the center of North American trade policy, even as American consumers face an average $700 increase in costs this year from U.S. tariffs.

That cost estimate comes from the Tax Foundation, which tracks the economic impact of U.S. tariff policy.

U.S. Trade Representative Jamieson Greer said Tuesday that tariffs on North American trade partners will remain in place as long as the U.S. runs a trade deficit, signaling that the joint review of the United States-Mexico-Canada Agreement scheduled for July will not bring relief for consumers or businesses on any side of the border.

“As long as we have a giant trade deficit we will have tariffs,” Greer said at the Council on Foreign Relations in Washington. “The reality is we’ve spent the past year and a half going to countries telling them we have to have some level of tariff.”

Greer also singled out Canada alongside China as one of the few countries to retaliate against U.S. tariffs, saying the two nations are now in “a different spot” from other trading partners.

“It is hard to see necessarily where that ends,” Greer said of Canada.

Canada supplies 64% of U.S. crude oil imports and is the largest foreign source of U.S. energy imports overall, according to the Congressional Research Service. The United States currently imposes 50% tariffs on Canadian steel and aluminum with no exemption for USMCA-compliant goods. Canada has maintained retaliatory tariffs on U.S. vehicles and C$15.6 billion (about $11.3 billion) worth of American steel and aluminum imports.

Canadian Prime Minister Mark Carney traveled to New York on Wednesday to promote Canada as an investment destination, highlighting the country’s trade agreements with 51 nations and calling for “a stronger, more independent economy.”

Matthew Holmes, executive vice president of the Canadian Chamber of Commerce, said the integrated nature of North American supply chains means tariffs ultimately raise costs across all three economies.

“Tariffs on steel, aluminum, autos and other goods raise costs throughout North American supply chains and create uncertainty for businesses making investment and hiring decisions,” Holmes said. “That’s not good for any one of our economies.”

Holmes also rejected comparisons between Canada and China.

“Canada faced criticism from the U.S. in recent months for exploring deeper trade engagement with China, only to see the U.S. later pursue some similar conversations itself,” Holmes said. “That reflects the complexity and instability of the current global trade environment.”

Negotiations with Mexico begin Thursday in Mexico City, with additional rounds scheduled for Washington in June and Mexico City in July. Greer said the United States wants stricter rules of origin to increase American content requirements in industrial goods, align tariffs against imports from countries without U.S. free trade agreements – particularly in Asia – and reduce the trade deficit with Mexico.

Researchers at the Federal Reserve Bank of New York found American consumers bore nearly 90% of the cost of U.S. tariffs in 2025.

A Center Square Voters’ Voice poll conducted in March found 42% of voters believe American consumers primarily pay tariff costs, while 12% said foreign countries bear most of the burden.

White House spokesman Kush Desai told The Center Square in March that the administration views tariffs as a successful negotiating tool.

“In the past year, President Trump has used tariffs to renegotiate broken trade deals, lower prescription drug prices, cut our trade deficit, and secure trillions in investments to reshore manufacturing,” Desai said. “The Administration will continue to focus on cementing and touting these victories for the American people in the weeks and months ahead.”

The existing 10% tariff imposed under Section 122 of the Trade Act of 1974 is scheduled to expire July 24, the same month as the USMCA joint review. Treasury Secretary Scott Bessent has said the administration could replace those tariffs with a new round imposed under Section 301 as early as July.

Phillip Magness, a senior fellow at the Independent Institute, said Section 301 is on firmer legal ground than the tariff authorities courts have already struck down, but cautioned that the administration appears to be stretching the statute beyond its intended scope.

“Trump appears to be preparing to use Section 301 much more aggressively and expansively than any of his predecessors,” Magness said, “which raises the question of whether he is attempting to stretch the scope of a statute that was intended for relatively narrow and well-defined circumstances.”

Magness added that attempts to renew Section 122 before its expiration would face legal risk.

“It would strongly suggest that they are resorting to legal gimmickry with the intention of bypassing the letter of the statute’s 150-day limit,” he told The Center Square.

With negotiations only beginning and new tariffs potentially taking effect this summer, businesses and consumers across North America face continued uncertainty and potentially higher costs.