Canada has announced it will lift some of its retaliatory tariffs on U.S. goods, though duties on key sectors such as autos, steel, and aluminium will remain in place. Prime Minister Mark Carney made the announcement on Friday, following his first phone conversation with U.S. President Donald Trump since both nations missed a self-imposed deadline for a trade agreement.
The decision affects a 25% levy previously imposed on approximately C$30 billion (£16 billion; $21.7 billion) worth of American products, ranging from orange juice to washing machines. The tariffs were introduced as a direct response to U.S. duties, which currently reach 35% on goods not compliant with the existing free trade agreement.
Carney explained that Canada will now align its tariffs with U.S. policy by removing levies on goods covered under the U.S.-Mexico-Canada Agreement (USMCA). He emphasized that this move “re-establishes free trade for the vast majority” of goods traded between the two countries. The measure is set to take effect on 1 September.
The White House welcomed Canada’s decision, calling it “long overdue,” and expressed optimism about continuing discussions with Ottawa on trade and national security. President Trump told reporters that he and Carney would continue talks in the near future.
Canada is one of many nations targeted by U.S. tariffs under Trump’s global trade strategy. However, along with China, Canada is one of the few countries to have retaliated with its own duties on American goods. Despite this, public opinion in Canada has largely supported the counter-tariffs.
Canada to Ease Select Trade Tariffs Targeting the U.S
Carney, elected in April, had campaigned on an assertive “elbows up” approach to negotiating with Trump, borrowing a term from ice hockey to signal his tough stance. Conservative leader Pierre Poilievre criticized the decision to lift some tariffs, claiming Carney’s “elbows have mysteriously gone missing” and describing it as “yet another capitulation.”
When questioned about whether Canada was softening its approach, Carney stressed that the country still maintains a more favorable tariff arrangement with the U.S. than many other nations. Under the USMCA carve-out, Canada’s effective tariff rate is about 5.6%, considerably lower than the 16% average for other countries. “As we work to address outstanding trade issues with the U.S., it’s important to preserve this unique advantage for Canadian workers and businesses,” he said.
Since January, Trump has raised tariffs or imposed new ones on goods from multiple countries, threatening further increases to secure trade deals favorable to the U.S. Washington has also expressed frustration with some Canadian political rhetoric, which, according to U.S. Ambassador Pete Hoekstra, attacks Trump personally rather than focusing on policy. Hoekstra warned that maintaining Canada’s counter-tariffs risked undermining trade negotiations and pulling the rug out from the USMCA.
Looking ahead, Carney said Canada would focus on accelerating talks on autos, steel, aluminium, and lumber ahead of the USMCA review scheduled for next year. The U.S. currently imposes a 50% tariff on most steel and aluminium imports, with exceptions including the UK, and additional duties on copper and auto imports. Canada’s 25% tariffs on American steel, aluminium, and autos will remain, reflecting the strategic importance of these sectors.
Economists have warned that U.S. tariffs on steel and aluminium are “hugely disruptive” to Canada, a major supplier of both metals. The trade restrictions have already prompted production cutbacks and contract cancellations. The automotive sector, closely integrated across the U.S., Canada, and Mexico, is also at risk, given that cars frequently cross borders multiple times during assembly.
Ontario, Canada’s automotive hub, has felt the impact acutely. The province reported a loss of 38,000 jobs over the past three months, the majority in manufacturing, underscoring the vulnerability of Canadian industries to trade disruptions.
By lifting tariffs on a wide range of U.S. goods while keeping duties on strategic sectors, Carney aims to balance the need for trade cooperation with the protection of Canadian industries. The move is expected to stabilize prices for everyday products while leaving critical negotiations ongoing in areas crucial to Canada’s economy. As talks continue, both nations face the challenge of maintaining the delicate balance between safeguarding domestic industries and ensuring the free flow of trade under the USMCA framework.
Source- BBC
