35% tariff today kicked Canadian goods. How big will it have?

With signing an executive order, US President Donald Trump increased Canada’s tariff rate to 35 percent, which is effective today at 12:01 pm.

This is an increase of 10 percent at the rate of 25 percent, which is effective on Canada’s goods south of the limit Since marchAnd there is a blanket tariff that will apply to Canadian products throughout the board.

However, it does not paint the whole picture. A very small number of Canadian products will be subjected to 35 percent tariffs.

This is because tariffs do not apply to all the items that are subject to the Canada-US-Maxico Agreement (CUSMA), which are the existing free trade deals to control trade between three countries. Those products can go beyond the tariff free range.

Most of Most of the goods of Canada for the US are covered by Kusma. Bank of Canada, in its monetary policy report released on Wednesday, said that the estimated 95 percent of the goods sent to the south of the border qualify under that agreement.

This means that the new, high 35 percent rate will be felt by a small fraction of exports that are not Kusma-non-compliance, which possibly include a broad array of products in all areas according to experts.

Eric Miller, president and CEO of the Redu Potomac Strategy Group, said, “(Cusema) is something that is ensuring a general position in trade flow in most parts of the economy.” “And so the maintenance of that discount was absolutely important.”

There is no simple list of items that are cusema-non-contradictory, as products are certified on a case-case basis based on several complex factors.

To get a discount, a certain amount of the product should be made in Canada, with Canadian input.

Take the example of a stake versus a screwdriver.

Miller says, if a cow is born, raised, slaughtered, slaughtered and prepared, then the steak – the final product – is clearly Canadian and will be preserved under the cusema, says Miller says.

But a specific screwdriver is made of metal, as well as with plastic or rubber for the handle. The manufacturer will have to ensure that according to Miller Thompson LLP’s managing partner Danielback, adequate content from Canada, Mexico or America is usually about 60 percent.

Then, you have to make sure that you are adding value to those parts and converting it to a finished product before shipping it out. In the case of screwdriver, you are taking raw materials and making them in a new, finished item, so that it completes the bar.

Overall, anything is deducted or mined, usually Kusma-Anuroop, Kiselbak said.

Nothing more complicated in Canada becomes more complicated. Electronics and machinery, in particular, are product types that are difficult times in obtaining cusma certification.

At its top, the certification process can be challenging, requiring records that show where all the product components come from, and it is expensive.

“(Business) considers what the rules are telling them,” Miller said. “It is almost like cryptography or something.” For this reason, Miller says that some businesses have not only acquired Kusma certification in the past – something that is now changing that the rates are very high.

While the fraction of companies that qualifies for free trade discounts may be small, Miller says the impact of the new rate should not be ignored.

Many of those who are hit by Saturday tariff growth will be small-to-middle-sized businesses that rely on the components done in countries outside Canada-and can not easily change them with citrus materials elsewhere.

“If you are used to source a particular input from China for the last 10 years, it is not so easy to say and say,” Now I am going to buy that good, “Miller said. “They cannot change easily and they cannot meet the rules, so they have to pay 35 percent. And for them, it is very disastrous to go from 25 percent to 35 percent,” Miller.

Kiselbach says that 35 percent of tariffs may be higher than the margins of some companies, meaning that they are losing money on each item sold at the current rate.

Sectoral tariffs are still in the game

Trump has not affected the rate of 35 percent at the prescribed rates for specific areas.

These include 50 percent tariffs on steel and aluminum, as well as 25 percent on cars and auto parts, both were already effective.

A new, 50 percent tariff on some copper products, Copper pipes and wiringEven today came into force. The Trump administration created carvings for copper input materials such as ores, concentrations and cathods, providing some relief to the industry.

The Trade Association Canadian manufacturers and chief economists of exporters Alan Arkand said that sector-specific rates are not largely new, but the impact of these steep rates on important areas cannot be ignored.

“These are very important industries for Canada,” said Arkand. “These are tariff rates that are not just sustainable for these industries. So it is actually a rubbing of this issue.”