Ottawa will lift some retaliatory duties while maintaining tariffs on automobiles, steel, and aluminium.
Prime Minister Mark Carney announced Friday that Canada will reduce part of its trade retaliation against the United States. While levies on vehicles, steel, and aluminium remain in place, other tariffs on American goods will be removed starting September 1.
Action comes after missed trade deadline
The announcement follows Carney’s first phone call with President Donald Trump since both countries failed to meet their self-imposed deadline for a new trade deal. Canada had previously imposed a 25% tariff on roughly C$30bn (£16bn; $21.7bn) of US goods, including washing machines and orange juice, in response to American tariffs of 35% on items not covered by the existing free trade agreement.
Carney said Canada will now align with the US by eliminating tariffs on products covered under the US-Mexico-Canada Agreement (USMCA), restoring mostly duty-free trade for the majority of goods moving between the two countries.
The White House welcomed the announcement in a statement to CBS, calling it “long overdue” and expressing anticipation for further discussions on trade and security. Trump later told reporters he expects to speak with Carney again soon.
Domestic reaction and political debate
Although polls show most Canadians support retaliatory tariffs, opposition figures criticized the move. Conservative leader Pierre Poilievre accused Carney of abandoning his “elbows up” negotiating stance, describing it as a retreat.
Carney defended the decision, noting that USMCA provides Canadian exporters with an effective tariff rate of about 5.6%, far below the global average of roughly 16%. He stressed the importance of maintaining this advantage for Canadian businesses and workers.
Since January, Trump has raised or introduced tariffs on goods from multiple countries and signaled additional increases to secure trade deals favorable to the US. US ambassador Pete Hoekstra warned that Canada’s counter-tariffs could undermine negotiations and criticized some Canadian politicians for attacking Trump personally instead of addressing policy issues.
Focus moves to key industries
Carney said the next stage of discussions will concentrate on autos, steel, aluminium, lumber, and other major sectors ahead of next year’s scheduled 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 significant supplier of steel and aluminium to the US, Canadian companies have reported contract cancellations and reduced production. The auto industry is also under pressure, as vehicles cross borders between the US, Canada, and Mexico multiple times during assembly. Ontario, the center of Canada’s auto manufacturing, has lost 38,000 jobs over the past three months, mostly in factories.
