06:51 AM EDT, 03/13/2026 (MT Newswires) -- The share of Canadian exports bound for the United States is gradually trending lower, averaging 76% in 2024 and 72% last year and coming in at 68% in January 2026, said Scotiabank.

This has been driven by a decline in exports to the U.S. and increasing exports to other regions -- mainly Europe, noted the bank. In January, exports to the U.S. fell 3.8% month over month and were down 13.7% compared with 2024.

Exports to other countries fell 6.5% month over month but were 28% higher than 2024 -- though much of this has been driven by elevated overseas exports of gold. A similar dynamic is playing out on the import side, as the share of Canadian imports from the U.S. is down to 56% from 62% in 2024, pointed out Scotiabank.

Canada continues to benefit from a relatively low effective tariff rate on total exports, stated the bank. 3.1% is Scotiabank's latest estimate -- based on pre-tariff trade flows -- of the increase in tariffs since end-2024, thanks to most of Canada's trade with the U.S. continuing on a tariff-free basis under CUSMA. This is down from 4.5% last month due to the country-specific U.S. IEEPA tariffs being replaced by a 10% global tariff.

The reported average actual duties paid on U.S. goods imports from Canada was 3.1% for the second month in a row, down from close to 4% six months ago. This should continue to trend lower through February and March. The proportion of Canadian goods imported into the U.S. facing tariffs has settled around 10%.

The U.S. trade deficit is back close to its pre-tariff level, stated the bank. U.S. trade saw significant volatility early in 2025 in response to the tariffs, before stabilizing later in the year. In January, U.S. exports rose 5.5% and imports fell 0.7%, resulting in a decline in the trade deficit to US$55 billion, down from around US$70 billion in 2024.

The U.S. import tariffs continue to create inflationary pressures in that country, with the latest estimate of the cumulative impact of the tariffs on U.S. CPI reaching nearly a full percentage point -- clouding the outlook for U.S. interest rate cuts, especially given recent increases in oil prices, added Scotiabank.

Tariffs and uncertainty continue despite the U.S. Supreme Court ruling. While the U.S. IEEPA tariffs were struck down last month, a new temporary global tariff of 10% was immediately implemented to replace them -- with a promised increase to 15% -- and work is underway to design the longer-term replacements, which could be higher.

The new global tariff is lower than the 35% tariff on non-CUSMA-compliant goods that Canada previously faced, though the vast majority of Canada's trade has been compliant and, as such, exempt from those tariffs. The sectoral tariffs are by far the most impactful for Canada, and haven't been impacted by recent changes.