Mexico and Canada receive exemption to 10% US levy while USMCA faces risk

Mexico and Canada received an exemption from a proposed 10% U.S. levy under a USMCA carve-out, and the administration says it seeks continuity as the tariff order takes effect on Feb. 24.

Mexico and Canada have been granted an exemption from a proposed 10% U.S. levy under a carve-out in the USMCA trade agreement. The exemption allows continued tariff-free imports of oil and other resources. U.S. officials have described the administration's position as seeking continuity with the new tariff order. The order is scheduled to take effect on Feb. 24, the day of the State of the Union speech. Key facts: - The exemption uses a USMCA carve-out to preserve tariff-free trade in oil and certain manufacturing inputs. - U.S. Trade Representative Jamieson Greer said the White House is seeking "continuity" with the new tariff order. - The new tariff order is set to take effect on Feb. 24. - Reports note the president expressed frustration over a court decision, which has raised questions about the future of USMCA. Summary: The exemption is reported to limit disruption to cross-border flows of energy and manufacturing inputs by keeping those imports tariff-free. Implementation of the tariff order on Feb. 24 is the next scheduled step, while questions about potential changes to USMCA remain undetermined at this time.