LOCATION: National
Issue/Source: Canada-U.S.
Date: July 2025
Suggested Responses
- Canada’s economic partnership with the United States (U.S.) is underpinned by highly integrated transportation networks.
- These networks facilitate the smooth flow of goods across our borders and enhance connectivity between our people and communities.
- Given the value of trade that moves between our two countries, Transport Canada is committed to supporting our integrated supply chains and economies. Transport Canada will continue to work with the U.S. Department of Transportation to create modern, safe, secure and efficient transportation systems that benefit both nations.
- Transport Canada continues to collaborate on shared transportation priorities, including enhancing safety and security, strengthening supply chains, driving innovation and improving infrastructure.
IF PRESSED
- Unwarranted tariffs have the potential to disrupt deeply integrated transportation networks and long-established North American supply chains.
- Transport Canada is monitoring impacts on the transportation network and Canadian transportation stakeholders to mitigate any potential disruptions.
BACKGROUND INFORMATION
- Canada and the U.S. have had a longstanding and robust trading relationship. The U.S. is Canada’s top trading partner, accounting for 76.4% of Canadian exports and 49.2% of imports in 2024. This economic partnership is underpinned by highly integrated transportation networks that span road, rail, air and maritime systems. These networks facilitated the movement of $973.7 billion in goods across the border in 2024, supporting critical supply chains and driving economic growth in both countries.
- Imports and exports move by road, rail, water, air and pipeline. Trucking continues to be the dominant form of freight transportation between Canada and the U.S., accounting for over half (55.5%) of total trade flows by value. Marine trade accounts for a small share of Canada’s trade with the U.S while air cargo is typically reserved for the movement of high-value/time-sensitive goods.
- Cooperation between Transport Canada (TC) and the U.S. Department of Transportation (U.S. DOT) is highly integrated across all modes and at all levels. In particular, TC and U.S. DOT maintain extensive regulatory cooperation to enhance cross-border efficiency, ensure safety and security and promote consistency in standards.
- Since March 7, 2025, Canadian goods that are compliant with the Canada-United States-Mexico Agreement (CUSMA) have been exempt from U.S. tariffs that entered into force on March 4, 2025 (i.e., a 25% general tariff and a 10% tariff applied to potash and energy products). Other tariffs that are in place in Canada include a global 50% tariff on steel and aluminum imports (on June 4, 2025, the U.S. increased its tariffs on steel and aluminum imports from 25% to 50%) and a global 25% tariff on all imported passenger vehicles and light trucks (since April 3, 2025). For Canada and Mexico, the tariffs on automobiles and light trucks apply to the non-U.S. content of vehicles imported under CUSMA, and to the full value of vehicles not imported under CUSMA.
- In response to the U.S. tariffs, Canada has implemented a series of retaliatory measures:
- February 4, 2025: a 25% tariff on $30 billion of U.S. origin goods;
- March 13, 2025: a 25% tariff on $29.8 billion of U.S. imports, including steel and aluminum products; and
- April 9, 2025: a 25% tariff on non-CUSMA compliant U.S.-made vehicles and on the non-Canadian and non-Mexican content of CUSMA-compliant U.S. vehicles.
- Canadian transportation companies are highly exposed to tariffs, including through reduced demand and associated merchandise volumes, rerouted trade flows, and increased cross-border compliance burdens. Declines in demand for commodities may lead to declines in freight transportation demand, depending on the mode and region. Trucking may be particularly vulnerable as exports of vehicle manufacturing rely heavily on cross-border operations, and vehicle parts are moved by truck.