America's effective tariff rate ticked down to 16% in July from 17% earlier in the month, Fitch Ratings said, thanks to a surge in tariff-free imports from Canada and Mexico under the USMCA trade pact.

The jump was striking. In June, 81% of Canadian exports into the U.S. qualified as USMCA-compliant, up from 56% the month before. Mexico saw a similar move, with 77% of shipments clearing the bar versus just 42% in May. Those exemptions helped blunt the sting of Trump-era tariffs that still technically set rates at 35% for Canada and 25% for Mexico.

Elsewhere, though, the tariff picture looks much tougher. China's effective rate has spiked to 41.4%, more than 30 percentage points higher than last year. India faces a 50% rate, while the European Union averages 15%, with member states ranging from about 3% to more than 18%.

All this is playing out against a weaker U.S. dollar. The Dollar Index is down 9.5% so far in 2025, while the Canadian dollar has gained 4% and Mexico's peso has surged 11%. For investors, that combination of softer tariffs on North American trade and stronger local currencies makes Canada- and Mexico-linked ETFs like EWC, EWW, FXC, and MXF stand out more than ever.