Ottawa will lift certain retaliatory duties while keeping tariffs on autos, steel, and aluminium.
Prime Minister Mark Carney announced Friday that Canada will scale back part of its trade countermeasures against the United States. While tariffs on vehicles, steel, and aluminium remain, other duties on American products will be removed starting September 1.
Decision follows missed trade deadline
The announcement comes after Carney’s first phone call with President Donald Trump since both nations missed their self-imposed deadline for a new trade deal. Canada had previously imposed a 25% tariff on around C$30bn (£16bn; $21.7bn) of US goods, including appliances and orange juice, in retaliation for US tariffs of 35% on items outside the existing free trade agreement.
Carney said Canada will now eliminate tariffs on goods covered under the US-Mexico-Canada Agreement (USMCA), restoring largely duty-free trade for most products exchanged between the two countries.
The White House welcomed the move in a statement to CBS, calling it “long overdue” and expressing optimism for continued discussions on trade and security. Trump later told reporters he expects to speak with Carney again soon.
Domestic reaction and political debate
Although surveys show strong Canadian support for retaliatory tariffs, opposition leaders criticized the policy. Conservative leader Pierre Poilievre said Carney had abandoned his “elbows up” negotiating approach, describing the decision as a retreat.
Carney defended the change, noting that USMCA provides Canadian exporters with an effective tariff rate of roughly 5.6%, far below the global average of about 16%. He stressed that protecting this advantage is essential for Canadian workers and businesses.
Since January, Trump has imposed or raised tariffs on goods from multiple countries and warned of further increases to secure trade deals favorable to the US. US ambassador Pete Hoekstra cautioned that Canada’s counter-tariffs could disrupt negotiations and criticized Canadian politicians for attacking Trump personally rather than addressing policy.
Focus shifts to key industries
Carney said the next phase of negotiations will prioritize autos, steel, aluminium, lumber, and other significant sectors ahead of next year’s USMCA review.
The US currently applies a 50% tariff on steel and aluminium imports—excluding the UK—along with duties on copper and vehicles. Canada’s 25% tariffs on American metals and autos will remain in effect for now.
Economists warn that these trade measures are already affecting Canada’s economy. As a leading supplier of steel and aluminium to the US, Canadian companies have reported contract cancellations and production cuts. The auto sector is also under pressure, with vehicles frequently crossing borders between the US, Canada, and Mexico during assembly. Ontario, the heart of Canadian auto manufacturing, has lost 38,000 jobs in the past three months, most of them in factories.
