The U.S. manufacturing, agricultural and food-processing sectors are expected to benefit the most from the country's agreement with Canada and Mexico to drop steel and aluminum tariffs, Moody's said.

The rating agency said the U.S. tariffs imposed in 2018 on Canadian and Mexican steel and aluminum products were compressing the margins of U.S. manufacturers, including in aerospace, transportation, heavy machinery, chemicals, medical equipment, petroleum refining and construction.

But with the tariffs lifted, manufacturers may face lower costs, as an expected increase in metals imports will pressure domestic steel and aluminum prices, according to Moody's.

"The tariff removal will particularly boost the competitiveness of steel- and aluminum-consuming domestic manufacturers that operate in highly competitive and fragmented markets," Moody's said, adding that the tariff move will also drive investment in capital goods.

The tariff removal will be credit negative for U.S. steel producers, but will be neutral to beneficial for aluminum smelters, Moody's said.

In addition, the removal of retaliatory tariffs imposed by Canada and Mexico on American exports will ease strains on the U.S. agriculture and food processing industries, the rating agency said. Products targeted by the retaliatory tariffs included pork, cooked food, soy sauce, berries and whiskey.

"The agricultural and related sectors have borne the brunt of U.S. trade restrictions and retaliatory measures by its trading partners amid already depressed prices and weakened demand," the rating agency said.