Trade Agreements with Canada

Trade Agreements with Canada: What Every Business Owner Needs to Know

Canada has always been a significant trading partner for the United States. In 2019, the United States` exports to Canada were valued at $292.7 billion, while imports from Canada were valued at $314.1 billion, making it the country`s second-largest trading partner after China. Trading with Canada is exceptionally important for American businesses, especially those operating in the manufacturing, agriculture, and energy sectors.

As a business owner involved in international trade, it`s essential to understand the trade agreements that exist between the United States and Canada. In this article, we’ll discuss some of the critical trade agreements between the two countries and their impact on the economy.

The U.S.-Canada Free Trade Agreement (FTA)

The United States and Canada signed the FTA in 1988, which eliminated tariffs on most goods between the two countries. The FTA has been regarded as a significant success story in trade agreements history, as it helped both countries` economies grow by expanding exports and creating new jobs. The FTA was later replaced by the North American Free Trade Agreement (NAFTA) in 1994.

The North American Free Trade Agreement (NAFTA)

NAFTA is a trilateral trade agreement between the United States, Canada, and Mexico. The agreement aims to eliminate trade barriers between the three countries and promote trade and investment. Under NAFTA, tariffs on goods traded between the three countries were eliminated, and restrictions on investment were reduced. The agreement has had a significant impact on the economy of the United States, Canada, and Mexico. In 2018, the three countries` trade under NAFTA was valued at $1.2 trillion.

United States-Mexico-Canada Agreement (USMCA)

The USMCA replaced NAFTA on July 1, 2020. The new agreement includes several improvements to the previous agreement, such as updates on e-commerce, intellectual property protection, environment, and labor standards. The USMCA also seeks to promote cooperation and regional economic development between the three countries. The USMCA ensures that 75% of automotive content is produced in North America, which will help create jobs and promote growth in the manufacturing sector.

Impact of Trade Agreements with Canada on Small Businesses

Trade agreements with Canada have had a significant impact on small businesses in the United States. Tariff reductions and elimination of trade barriers have made it easier to import and export goods, creating new opportunities for small businesses. The USMCA`s rules of origin and customs procedures provide more significant opportunities for small businesses to expand their markets and increase exports. The agreement also protects intellectual property, which is essential for small businesses that rely on innovation.


Trade agreements with Canada have had a substantial impact on the United States` economy, especially the manufacturing, agriculture, and energy sectors. The FTA, NAFTA, and USMCA have eliminated trade barriers and tariffs, promoting trade and investment between the two countries. Small businesses have benefited from these agreements, as they have provided new opportunities for importing and exporting goods. As trade negotiations continue and new agreements are signed, businesses must keep up with the changes to ensure they are fully benefiting from these trade agreements.

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