The United States–Mexico–Canada Agreement 

The United States–Mexico–Canada Agreement (USMCA) entered into force on July 1, 2020. The USMCA maintains the zero tariffs that were in place among the three countries under the North American Free Trade Agreement and modernized the agreement to include strong, enforceable labor and environmental obligations, ground-breaking provisions to combat non-market practices, and provisions covering small and medium-sized enterprises. The United States, Canada, and Mexico are scheduled to conduct the formal joint review of the United States-Mexico-Canada Agreement (USMCA) starting July 1, 2026, with each country undertaking domestic public consultation processes to gather stakeholder input on the Agreement’s operation and potential modifications ahead of the review.

Trade Barriers

Barriers (tariff and non-tariff) U.S. companies face when exporting may include:  
•    Particularly high tariffs for certain products  
•    Restrictions on selling to the government of the country  
•    Import licensing requirements  
•    Anti-dumping and countervailing duty measures  
•    Product bans  
•    Any quarantine measures for agricultural products  
•    Foreign governments that prohibit participation in the rule-making process  
•    Rules that discriminate against U.S. products or are unnecessarily trade-restrictive  
•    Rules that are inconsistent with relevant international standards  
•    Technical requirements and mandatory standards that are overly restrictive, discriminatory, or more burdensome than necessary  

What should you do when you identify a trade barrier?   

The United States Department of Commerce’s Office of Trade Agreements Negotiations and Compliance (TANC), within the International Trade Administration, is a vital part of the United States government’s efforts to reduce unfair foreign government-imposed trade barriers. For assistance with non-tariff barriers related to trade agreement non-compliance, such as standards and technical regulations-related barriers (i.e., technical barriers to trade), contact TANC to report a trade barrier online. Other trade agreement non-compliance areas that TANC provides assistance on include import licensing, trade facilitation, customs valuation, rules of origin, anti-corruption, government procurement, investment, and sanitary and phytosanitary non-tariff trade barriers.  

Provide the following information from your organization to help assess the barrier:  
•    A translated copy of the technical regulation  
•    Identification of the problematic areas, and explanation of why they are problematic  
•    Background on how the standards and procedures differ from those to which your organization complies 
•    Information about how your organization may be negatively affected, including the dollar value, if possible  

Possible options for resolution:  

Seeking voluntary compliance through relevant trade agreements, diplomatic resources, and advocacy from high-level officials is the preferred option to remove trade barriers in a commercially meaningful time frame. The action plan will be tailored to the case and country, and always in concert with the reporting company/industry.  

Tariff Barriers

Canada maintains some tariff barriers to trade with the United States, including a 25% tariff on steel and aluminum products and non-CUSMA compliant vehicles and U.S. content in CUSMA-compliant vehicles imported from the United States. Canada removed some retaliatory tariffs on general U.S. imports effective September 1, 2025, however, tariffs on steel, aluminum, and autos remain in place.

Wine, Beer, and Spirits 

Most Canadian provinces have province-run liquor control boards, which are the sole authorized sellers of wine, beer, and spirits in those provinces. Market access barriers imposed by Canadian provincial liquor control boards greatly hamper exports of U.S. wine, beer, and spirits to Canada. These barriers include cost-of-service mark-ups, restrictions on listings (products that the liquor board will carry), reference prices (either the maximum prices the liquor board is willing to pay or the prices below which imported products may not be sold), label requirements, discounting policies (requirements that suppliers must offer rebates or reduce their prices to meet sales targets), and distribution policies. Canada has imposed 25% tariffs on U.S. alcoholic beverages in response to U.S. tariffs on Canadian goods, leading several provinces to remove American alcohol from store shelves, although some provinces have since resumed sales of existing U.S. stock while others continue to store unsold products pending further decisions.

Non-Tariff Barriers

Agricultural Supply Management

Canada regulates its dairy, chicken, turkey, and egg industries through a supply-management system involving production quotas, marketing boards, and tariff-rate quotas (TRQs) for imports. This system limits U.S. exports above TRQ levels by imposing prohibitively high tariffs, such as 245% on cheese and 298% on butter, and raises domestic prices. The USMCA created new TRQs for U.S. dairy, chicken, eggs, and turkey, along with rules requiring transparent and fair administration. In 2021, the United States challenged Canada’s allocation of dairy TRQs, arguing that set-asides for Canadian processors violated USMCA commitments. A 2022 panel agreed, prompting Canada to revise its measures. The United States, however, rejected the changes and launched further consultations in 2022 and 2023, claiming Canada’s allocation criteria continued to restrict access. A second panel report in November 2023 upheld Canada’s approach, though one panelist dissented. The United States continues to monitor compliance and tariff classifications closely.

Milk Classes 

Canada operates the Special Milk Class Permit Program (SMCPP), which provides discounted prices for milk components to domestic manufacturers of processed food products. These prices, pegged to U.S. or world levels, are lower than standard Canadian milk class prices and are intended to help Canadian processors compete with imports and in foreign markets. In 2016, Canadian dairy farmers and processors introduced a new national milk class (Class 7) with discount pricing for various dairy ingredients. Implemented in 2017, Class 7 reduced U.S. milk protein imports and boosted Canadian skim milk powder exports. Under the USMCA, Canada agreed to eliminate Class 7 within six months of the agreement’s entry into force. Canada also committed to pricing rules tied to U.S. benchmarks for certain dairy products, transparency measures to allow monitoring, and export charges on skim milk powder, milk protein concentrates, and infant formula above set thresholds. U.S. stakeholders remain concerned about Canada’s compliance.

Technical Barriers to Trade  

One of the trade barriers U.S. companies may face is a technical barrier to trade (TBT). Technical regulations and standards specify a product’s characteristics (such as size, functions, and performance), how it is labeled or packaged, and testing and certification requirements before it can enter a country’s market. These measures should serve legitimate public policy goals, but the requirements can be problematic when they are overly restrictive or discriminatory and are used to inhibit trade. In cases where they are more trade-restrictive or more burdensome than necessary, they are technical barriers to trade. The World Trade Organization (WTO) Agreement on Technical Barriers to Trade (TBT) and the United States-Mexico-Canada Agreement (USMCA) set rules aimed at preventing and addressing such barriers. The WTO TBT Committee meets three times a year and the United States Trade Representative (USTR) leads the United States delegation to engage trading partners to remove specific TBTs. This process gives a chance for the United States’ trading partners to come into compliance. 

Examples of Canadian Technical Barriers to Trade include:

Quebec’s Bill 96 

Bill 96 became law in the province of Quebec on June 1, 2022, and is intended to strengthen the use of the French language in the province. U.S. businesses have expressed concerns about the impact that Bill 96 will have on their federally registered trademarks for products manufactured after June 1, 2025, which is when the relevant provisions of Bill 96 enter into force. There is a two-year grace period (until June 1, 2027) allowing businesses to continue selling non-compliant products, provided those products were manufactured and packaged before June 1, 2025. Businesses will need to review their non-French language trademarks on the products’ packaging and labelling and translate into French any part of their trademark that contains a “generic term” or a “description of the product.” In June 2024, the United States engaged with Canada on Quebec’s Bill 96 at the WTO Committee on Technical Barriers to Trade meeting. The United States encouraged the Quebec provincial government to take into consideration business sector concerns and involve businesses in the drafting of further interpretive guidance on this law and the Final Regulation.

Zero Plastic Waste Agenda  

In 2018, Canada announced a comprehensive agenda to achieve zero plastic waste by 2030. As part of this agenda, Canada is developing a range of measures to prevent plastic pollution and improve circularity within the Canadian market, including extended producer responsibility, minimum recycled content, composability and recyclability labeling, and restrictions on the use of single use plastics. The United States supports Canada’s objective of reducing plastic pollution; however, U.S. industry has raised concerns that some aspects of Canada’s program would create negative impacts for trade and the environment. U.S. industry is concerned that without viable alternatives for plastic packaging, Canada’s proposed reductions in food packaging and packaging compostability requirements could compromise food safety, increase food loss and waste, and restrict U.S. agricultural exports. The United States continues to work closely with Canada to encourage the use of science-based approaches to address plastic pollution, including consideration of technological limitations and environmentally sustainable alternatives to plastics.

Compositional Standards for Cheese 

Canada’s regulations on compositional standards for cheese limit the amount of dry milk protein products that can be used in cheese making, reducing the demand for U.S. dry milk protein products. The United States continues to monitor these regulations for any changes that could have a further adverse impact on U.S. dairy product exports.

Intellectual Property Protection

Canada remained on the Watch List in the 2024 Special 301 Report. Canada’s commitments under the USMCA are designed to significantly improve Canada’s intellectual property (IP) environment, addressing areas of longstanding concern, including enforcement against counterfeit goods and online piracy, inspection of goods in-transit, transparency with respect to new geographical indications (GIs), and the broad interpretation of the fair dealing exception for the purpose of education. With respect to GIs, the United States remains highly concerned about countries’ negotiating product-specific IP outcomes as a condition of market access from the European Union and reiterates the importance of each individual IP right being independently evaluated on its individual merits. Poor enforcement with respect to counterfeit or pirated goods at the border and within Canada remains a concern. The Pacific Mall in Toronto is listed in the 2024 Review of Notorious Markets for Counterfeiting and Piracy (Notorious Markets List) for selling pirated and counterfeit goods.

Services Barriers

Audiovisual Services 

For cable television and direct-to-home broadcast services, more than 50% of the channels received by subscribers must be Canadian channels. Non-Canadian channels must be preapproved (“listed”) by the Canadian Radio-television and Telecommunications Commission (CRTC). Alternatively, non-Canadian channels can become Canadian by ceding majority equity control to a Canadian partner, as some U.S. channels have done. Foreign channels are prohibited from owning video distribution infrastructure in Canada. Canada permits Canadian cable and satellite suppliers to pick up the signals of U.S. stations near the border and redistribute them throughout Canada without U.S. broadcasters’ consent. Content owners can apply for compensation for the use of such content in Canada from a statutorily mandated fund into which Canadian cable and satellite suppliers pay. U.S. broadcasters consider this compensation to be insufficient and have sought the right to negotiate the carriage of their signals on commercially set rates and terms, as can be done in the United States.

Online Streaming 

On April 27, 2023, Canada passed the Online Streaming Act, amending the Broadcasting Act to give the CRTC authority to regulate online streaming platforms. The government directed the CRTC to establish a framework for financial contributions to support Canadian programming and to review the definition of Canadian content. On June 4, 2024, the CRTC announced that streaming services must contribute 5% of their Canadian revenues to the broadcasting system starting in the 2024–2025 broadcast year. The criteria, however, may exempt Canadian-owned services and prevent foreign suppliers from accessing the funding programs they help finance. The Canadian government is currently holding hearings to define the definition of Canadian content, which may also affect U.S. companies contributions to the fund. The United States has indicated it will monitor the implementation of the Act and its consistency with USMCA commitments.

Digital Services Taxation   

On June 20, 2024, Canada enacted a digital services tax (DST) imposing a 3% levy on revenues from online marketplaces, digital advertising, social media, and user data. After repeated U.S. objections, Canada rescinded the DST on June 29, 2025. However, refunds to companies that already paid the tax require new legislation, expected in Fall 2025. The United States continues to monitor the situation to ensure affected U.S. firms are reimbursed.

Investment Barriers  

The Investment Canada Act has regulated foreign investment in Canada since 1985. National security is a determining factor of Investment Canada Act reviews along with economic net benefits. Foreign investors must notify the Canadian Government when acquiring a controlling interest in an existing Canadian business or starting a new business. For more information on investment barriers, refer to the United States Trade Representative’s 2025 National Trade Estimate Report on Foreign Trade Barriers and the U.S. Department of State Investment Climate Statements website.