Canada Eases Retaliatory Tariffs on U.S. Goods Amid Trade Negotiations

Canada’s Prime Minister Mark Carney declared the country will drop some of its retaliatory tariffs on U.S. products, coinciding with ongoing trade discussions. While tariffs on compliant goods will be eliminated, those on autos, steel, and aluminum will remain.

Canada's Prime Minister Mark Carney made a significant announcement on Friday, revealing that the country will be reducing some of its retaliatory tariffs imposed on U.S. goods. This decision follows his first phone conversation with President Donald Trump since both nations missed a self-imposed deadline for a trade agreement.

Previously, Canada had levied a 25% tariff on an estimated C$30 billion (approximately £16bn; $21.7bn) worth of U.S. imports, including products like orange juice and washing machines. This tariff was retaliatory, a response to the U.S.'s own tariffs which, as of August, reached as high as 35% on goods conflicting with the existing free trade agreement.

Carney announced that Canada would now align tariff policies by lifting duties on goods that meet the criteria of the US-Mexico-Canada Agreement (USMCA). This adjustment is expected to “re-establish free trade for the vast majority” of goods exchanged between the two countries and will be effective starting September 1st.

The White House welcomed Canada's decision and described it as "long overdue," expressing hope for further negotiations regarding trade and national security with Canada. Notably, Canada is among the few countries to impose retaliatory tariffs against the U.S., alongside China.

Polling indicates that many Canadians favor these tariffs against the U.S., with Carney's approach characterized by a robust "elbows up" attitude towards negotiations with Trump, as he previously indicated during his campaign.

Defending the decision, Carney stated that Canada enjoys a more advantageous tariff arrangement with the U.S. compared to many other countries due to the free trade carve-out, which lowers the effective tariff rate on Canadian imports to around 5.6%—significantly below the global average of 16%.

Looking ahead, Carney emphasized that negotiations will now focus on key sectors, such as autos, steel, aluminum, and lumber, particularly as a review of the USMCA is scheduled for next year. While tariffs on U.S. steel, aluminum, and auto imports will continue to remain in place, Canada is adjusting its strategy in hopes of facilitating smoother trade relations moving forward, despite ongoing global trade tensions instigated by Trump's policies.