Key Takeaways
- Canada is set to remove retaliatory tariffs on a wide range of US products that comply with the North American trade deal (USMCA), a move aimed at de-escalating trade tensions with the White House.
- Visa (V) has reportedly ceased its open banking initiatives in the United States, citing an ongoing dispute over data access and a challenging regulatory environment.
- The Canadian tariff removal is expected to lower costs for consumers and businesses in both countries and improve cross-border trade relations, particularly as the USMCA review approaches.
- The halt in Visa's open banking efforts highlights the complex regulatory landscape and data access challenges facing financial technology innovation in the US.
Canada is poised to eliminate retaliatory tariffs on a substantial list of US products that adhere to the existing North American trade deal, known as the United States-Mexico-Canada Agreement (USMCA). This strategic move is intended to lower tensions with the White House, with Canadian Prime Minister Mark Carney expected to formally announce the decision following a cabinet meeting. The government's adjustment to its tariff policy will align more closely with US measures, meaning a broad range of US-made consumer goods will no longer face a 25% tariff when imported into Canada, provided they comply with USMCA provisions.
The decision comes as an "olive branch" to the US, aiming to prepare the ground for the upcoming review of the USMCA, which is anticipated in the coming months. While Canada had previously imposed counter-tariffs, including a 25% levy on non-USMCA compliant vehicles and certain non-North American content in compliant vehicles, the new policy emphasizes the importance of the trade agreement. Experts suggest this is a strategic play by the Canadian government to avoid further damage to its domestic economy.
The US had recently imposed 35% duties on Canadian imports not meeting USMCA requirements, though USMCA-qualifying goods were explicitly exempt. Over 85% of Canada-US trade is already tariff-free under the USMCA, and this latest move by Canada is expected to further streamline cross-border commerce. While many retaliatory tariffs will be removed, some levies on specific food items like orange juice, alcohol, coffee, as well as clothing and cosmetics, may still remain or have been subject to prior exemptions.
Meanwhile, Visa (V) has reportedly stopped its open banking initiatives in the United States, a decision attributed to an ongoing data access dispute. The US has experienced a "stop-start journey" toward implementing an open banking regulatory regime, characterized by clashes between fintech firms and banking associations over "account access" fees.
A 'Personal Financial Data Rights' rule, finalized by the Consumer Financial Protection Bureau (CFPB) in October 2024, aimed to facilitate consumer data portability and foster fintech innovation. However, this rule faced challenges from banking representatives, leading the CFPB itself to petition a court in May to rescind the '1033 open banking rule'. The Financial Technology Association (FTA) criticized this development, calling it a "handout to Wall Street banks" that could stifle competition and limit consumer access to digital financial services. This challenging regulatory backdrop, coupled with persistent concerns over consumer trust and data privacy, underscores the difficulties in advancing open banking in the US market.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.