The Importance of the US-Mexico-Canada Agreement for Washington State

1Why USMCA Matters for Washington

The United States–Mexico–Canada Agreement (USMCA) underpins Washington’s trade relationships with its two largest regional partners. Together, Canada and Mexico account for approximately 20% of Washington’s goods exports and one-third of its goods imports, and purchase billions of dollars of Washington services exports. In total, trade with Canada and Mexico supports about 320,000 Washington jobs.

WCIT championed USMCA as the successor to the North American Free Trade Agreement (NAFTA) because of its improvements it made, while ensuring continued tariff-free access for exporters and stabile supply chains for importers. More recently, USMCA has significantly mitigated the impact of new federal tariff actions. As the statutory 6-year USMCA review begins, WCIT’s top priority is the continuation of the USMCA and to ensure we “do no harm” to the integrated supply chains that have grown over the past 33 years of North American partnership.

2Exports to Canada & Mexico

The USMCA remains vital for keeping Washington exporters connected to Canadian and Mexican markets. From April 2025 to March 2026, 18% of Washington’s total goods exports went to these two partners. Businesses exported $7.3 billion in goods to Canada (12% of total exports) and $3.7 billion to Mexico (6%). Compared to the year ending in March 2025, exports to Canada were down 1.5%, while shipments to Mexico fell by 21%. These declines underscore Washington’s dependence on stable trade relationships and the protections provided by the USMCA.

Figure 1. Washington goods exports to Canada and Mexico (rolling 12 months, Dec. 2020–Mar. 2026).

From April 2025 to March 2026, top goods exports to Canada included civilian aircraft and parts, electrical energy, video game consoles, non-crude oil, and tractors. The Canadian market cannot be taken for granted. While civilian aircraft and parts and video game console exports posted strong growth, most categories fell year-over-year. This includes major exports like construction equipment (e.g., bulldozers, graders, etc.), which saw exports to Canada tumble by 60% from $191 million for the year ending in March 2025 to just $78 million in the most recent 12 months. In those same periods, Washington biodiesel exports to Canada fell by $127 million (-79%) and truck exports fell by $58 million (-42%). Apples and pears are the top agricultural export to Canada at $142 million in the most recent 12 months, the same as the year before. Washington also exported $87 million in stone fruits (e.g., cherries) and $79 million in berries and other miscellaneous fruits in the year ending in March 2026

Leading goods exports to Mexico were non-crude oil, civilian aircraft and parts, apples and pears, auto parts, and circuit boards. Apples and pears were the only top five exports from Washington to Mexico that increased compared to the prior year. Tractor exports saw some of the steepest declines: from $70 million in the year ending in March 2025 to just $2.9 million in the most recent 12 months. Prepared frozen vegetables (e.g., french fries) fell out of the top five exports to Mexico after declining by $41 million (-41%) in the most recent 12 months. Milk and cream rank just outside the top five exports to Mexico after growing by $20 million (45%) over the past year.

Some products are especially reliant on Canadian and Mexican markets. Between April 2025 and March 2026, Washington exported $2.4 billion worth of goods for which at least 90% of total exports went to Canada and Mexico. These highly dependent exports include video game consoles, electrical energy, tractors, paper and paperboard, and paper cartons and boxes.

Washington also relies on Canada and Mexico for services exports. In 2024, services trade to these partners totaled $3.6 billion, led by personal travel, computer software royalties, business travel, software design services, and passenger fares.

3Imports & Tariff Protection

The USMCA is equally critical for imports. While theoretically enabling tariff-free access from Canada and Mexico, tariff costs have spiked since early 2025. From April 2025 to March 2026, Washington imported $15.2 billion in goods from Canada (29% of total imports of imports from the world) and $1.5 billion in goods from Mexico (3%). Of those, an estimated $10.4 billion (62%) claimed USMCA. USMCA claims on these imports led to estimated direct tariff savings of about $126 million, though they partially offset by $86 million in estimated Section 232 tariff payments on USMCA-claiming imports.

USMCA’s indirect benefits were even more significant following the imposition of tariffs of up to 25% on Mexico and 35% on Canada for imports that did not comply with USMCA rules. As clearly shown in the graph below, USMCA-claiming imports rose sharply even as total imports declined.

Figure 2. Washington goods imports from Canada and Mexico — USMCA-claiming vs. non-claiming — with average tariff rate (Jan. 2020–Mar. 2026).

Much of the new claims can be attributed to products that previously faced no tariffs (e.g., crabs and other seafood) or very low tariffs (e.g., oil) regardless of the country of origin. While tariff reductions historically did not justify the compliance costs of claiming benefits, avoiding the IEEPA tariffs made it worthwhile. Despite the carveout for USMCA-compliant imports, Washington businesses paid an estimated $93 million in extra IEEPA tariffs on imports from Canada and Mexico in the 12 months ending in March 2026.

While the IEEPA tariffs were struck down, high USMCA claim rates could continue if the exemptions for USMCA-claiming imports are extended to future tariffs. IEEPA was immediately replaced by 10% Section 122 tariffs. The IEEPA tariff exemptions, such as for USMCA-eligible goods, were continued. The lower Section 122 rates and high USMCA-claim rates limited Section 122 costs to an estimated $2 million in March 2026.

Imports subject to Section 232 tariffs have not been so fortunate and remain fully subject to higher tariff rates, regardless of whether they meet USMCA rules. In total, Washington businesses paid $94 million in additional tariffs on steel and aluminum, $12 million on timber and lumber, and $9 million on autos and auto parts between April 2024 and March 2026. Pending Section 232 investigations threaten tariffs on billions more in imports, including:

• $8.2 billion in imports on the critical minerals 232 list
• $326 million in imports on the semiconductors 232 list
• $2.6 million in imports on the pharmaceuticals 232 list

Imports from Canada and Mexico also could be affected by new Section 301 investigations into structural excess capacity and enforcement of forced labor prohibitions, though for now it seems likely that any new Section 301 tariffs would include a carveout for USMCA-compliant goods.

From April 2025 to March 2026, top goods imports from Canada included crude oil, petroleum gasses, live bovine animals, lumber, and aircraft and drone parts. The declines in tariff payments for some of these top products, most notably crude oil, is due to initial uncertainty around USMCA claims when the IEEPA tariffs were first imposed in March 2025. However, the overall tariff costs increased by $122 million (372%).

Leading goods imports from Mexico included computers, circuit boards, phones, refrigerators and freezers, and insulated wire and cable from April 2025 to March 2026. Overall tariffs on imports from Mexico increased by $35 million (513%) compared to the prior 12 months.

Certain products are sourced almost exclusively from these partners. Between April 2025 and March 2026, Washington imported $355 million worth of goods for which Canada or Mexico was the only supplier.

Key imports into Washington where Canada accounts for a very high share include crude oil, petroleum gasses, live bovine animals, electrical energy, and iron and steel scrap.

Similarly, Washington is particularly dependent on imports of avocados, gypsum, citrus fruits, and wool fabrics from Mexico.