Ottawa will lift certain retaliatory duties while maintaining tariffs on autos, steel, and aluminium.
Prime Minister Mark Carney announced Friday that Canada will scale back part of its trade retaliation against the United States. While levies on vehicles, steel, and aluminium will remain, other tariffs on American products will be removed starting September 1.
Step follows missed trade deadline
The announcement comes after Carney’s first phone conversation with President Donald Trump since the two countries failed to meet their self-imposed deadline for a new trade deal. Canada had previously imposed a 25% tariff on about C$30bn (£16bn; $21.7bn) in US goods, including washing machines and orange juice, in response to US tariffs of 35% on items not covered under the current free trade agreement.
Carney said Canada will now remove tariffs on goods covered under the US-Mexico-Canada Agreement (USMCA), restoring mostly duty-free trade for the majority of products exchanged between the two nations.
The White House welcomed the move in a statement to CBS, calling it “long overdue” and expressing optimism about ongoing discussions on trade and national security. Trump later told reporters he expects to speak with Carney again soon.
Domestic reaction and political debate
Although most Canadians support retaliatory tariffs, opposition leaders criticized the decision. Conservative Pierre Poilievre said Carney had abandoned his “elbows up” negotiating approach, describing the move as a retreat.
Carney defended the change, noting that USMCA gives Canadian exporters an effective tariff rate of about 5.6%, far below the global average of roughly 16%. He stressed that maintaining this advantage is critical for Canadian businesses and workers.
Since January, Trump has introduced or increased tariffs on imports from multiple countries and threatened further hikes to secure deals favorable to the US. US ambassador Pete Hoekstra warned that Canada’s counter-tariffs could complicate negotiations and criticized Canadian politicians for focusing on personal attacks against Trump rather than policy.
Focus shifts to key sectors
Carney said the next round of talks will focus on autos, steel, aluminium, lumber, and other important industries ahead of next year’s scheduled USMCA review.
The US currently enforces a 50% tariff on steel and aluminium imports—excluding the UK—along with duties on copper and automobiles. Canada’s 25% tariffs on American metals and vehicles will remain in place for now.
Economists warn that these trade measures are already impacting Canada’s economy. As a major supplier of steel and aluminium to the US, Canadian companies have reported contract cancellations and production reductions. The auto industry is also under pressure, with vehicles frequently crossing borders between the US, Canada, and Mexico during assembly. Ontario, the center of Canadian auto manufacturing, has lost 38,000 jobs over the past three months, mostly in factories.
