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

The United States–Mexico–Canada Agreement (USMCA) underpins Washington state’s trade relationships with its two largest regional partners. Canada and Mexico together account for a substantial share of the state’s goods and services trade, supporting thousands of jobs and providing essential inputs for local industries. From January to July 2025, Washington exported $4.1 billion in goods to Canada and $2.6 billion in goods to Mexico, together making up more than 20% of the state’s total goods exports. On the import side, Washington businesses imported $9.9 billion from Canada and $766 million from Mexico, accounting for nearly one-third of all goods imports. The agreement ensures tariff-free access for exporters, stabilizes supply chains for importers, and mitigates the impact of recent federal tariff actions.

Exports

The USMCA remains vital for keeping Washington exporters connected to Canadian and Mexican markets. From January to July 2025, more than 20% of Washington’s total goods exports went to these two partners. Businesses exported $4.1 billion in goods to Canada (13% of total exports) and $2.6 billion to Mexico (8%). Compared to the same period in 2024, exports to Canada were down 20%, while shipments to Mexico rose 5%. These declines to Canada underscore Washington’s dependence on stable trade relationships and the protections provided by the USMCA.

From January to July 2025, top goods exports to Canada included civilian aircrafts, engines, and parts, electrical energy, video game consoles, non-crude oil, and tractors. While aerospace and video game console exports posted strong growth, most categories fell year-over-year.

Leading goods exports to Mexico were civilian aircrafts, engines, and parts, non-crude oil, fresh apples and pears, vehicle parts, and frozen vegetables. Strong growth in aerospace and motor vehicle parts exports, and many smaller export categories, more than offset declines in exports of non-crude oil and fresh apples and pears. Dairy products are another key Washington export to Mexico, amounting to $63 million in the first seven months of 2025, led by $30 million in milk and cream and $22 million in cheese and curd exports.

Some products are especially reliant on Canadian and Mexican markets. Between January and July 2025, Washington exported $2.0 billion worth of goods for which at least 90% of sales went to Canada and Mexico. These highly dependent exports include electrical energy, video game consoles, tractors, trucks, and paper and paperboard.

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.

Imports

The USMCA is equally critical for imports, enabling tariff-free access from Canada and Mexico. From January to July 2025, Washington imported $9.9 billion in goods from Canada (29% of total imports) and $766 million in goods from Mexico (2%). Of Washington’s imports from Canada and Mexico from January to July 2025, an estimated $4.3 billion (39%) claimed USMCA. This led to significant direct tariff savings of about $90 million.

Yet USMCA’s indirect benefits are 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 have risen sharply even as total imports have fallen.

Much as this can be attributed to products that 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 makes it worthwhile. Despite the carveout for USMCA-compliant imports, Washington businesses paid an estimated $36 million in extra IEEPA tariffs on imports from Canada and Mexico through July 2025.

While USMCA claims have helped mitigate IEEPA costs, Section 232 tariffs remain a major risk. Washington businesses already have paid $34 million in additional tariffs on steel and aluminum and $5.5 million on autos and auto parts in the first seven months of 2025. Pending Section 232 investigations threaten billions more in imports, including:

• $5.3 billion in imports on the critical minerals 232 list
• $661 million in imports on the lumber 232 list
• $38 million in imports on the semiconductors 232 list
• $1.7 million in imports on the pharmaceuticals 232 list

From January to July 2025, top goods imports from Canada included crude oil, petroleum gasses, lumber, live bovine animals, and non-crude oil.

Leading goods imports from Mexico included trucks, electrical boards and panels, refrigerators and freezers, phones, and insulated wire and cable from January to July 2025.

Certain products are sourced almost exclusively from these partners. Between January and July 2025, Washington imported $849 million worth of goods for which Canada was the only supplier, and $6.1 million supplied solely by Mexico.

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

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

Conclusion

Washington’s trade flows with Canada and Mexico demonstrate both the magnitude of its dependence and the critical protections provided by the USMCA. Washington exporters shipped nearly $7 billion in goods to Canada and Mexico, including $2.0 billion where those two markets account for at least 90% of exports to the world, in the first seven months of 2025. At the same time, USMCA saved Washington businesses $90 million in direct tariff costs and much more in waived IEEPA tariffs. Given these deep trading relationships, the USMCA remains essential for shielding businesses, workers, and consumers from escalating trade barriers and for sustaining the state’s economic resilience.