In a significant development, Prime Minister Mark Carney announced on Friday that Canada will soon rollback many of its retaliatory tariffs on goods imported from the United States. This announcement comes on the heels of Carney’s first direct conversation with President Donald Trump since both countries failed to meet a self-imposed deadline for a trade agreement.
Previously, Canada imposed a hefty 25% tariff on approximately C$30 billion (around £16 billion or $21.7 billion) worth of US goods, which included items such as orange juice and washing machines. These tariffs were implemented as a direct response to US tariffs targeting Canadian goods, which had reached 35% for products not compliant with existing trade agreements by August.
Carney stated that Canada would match the US by removing tariffs on products aligning with the US-Mexico-Canada Free Trade Agreement (USMCA), an initiative aimed at re-establishing the flow of trade for a majority of goods exchanged between the two nations. The new tariff structure will take effect on September 1.
The White House welcomed Canada's decision, calling it "long overdue," expressing eagerness to continue dialogue regarding trade and national security matters with Canada. Canada is among a limited number of nations—along with China—that have applied retaliatory tariffs against the US.
Recent polling indicates that a majority of Canadians support maintaining specific retaliatory tariffs on the US. Carney, who was elected in April, campaigned on a strong negotiating stance, often likening his approach to the aggressive strategy found in ice hockey.
In defending the decision, Carney emphasized that Canada has secured a favorable tariff arrangement with the US compared to many other countries. He noted the effective tariff rate on Canadian goods is approximately 5.6%, significantly lower than the global average of 16%.
Looking ahead, Carney highlighted the Canadian government's focus on expediting discussions around sensitive sectors, including autos, steel, aluminum, and lumber, prior to a scheduled review of the USMCA next year. Currently, the US holds a staggering 50% tariff on most steel and aluminum imports, except from the UK, and a 25% tariff on aluminum products. Canada, meanwhile, has maintained its 25% tariffs on American steel, aluminum, and autos for the time being.
Since returning to office in January, President Trump has engaged in a wide-ranging trade war, raising tariffs on numerous global goods as part of his strategy to negotiate favorable trade terms for the US.
