Ottawa will remove some retaliatory tariffs while keeping duties 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. Tariffs on vehicles, steel, and aluminium will remain in effect, but other levies on US goods will be lifted starting September 1.
Move follows missed trade deadline
The announcement comes after Carney’s first phone call with President Donald Trump since the two countries failed to meet their deadline for a new trade agreement. Previously, Canada had imposed a 25% tariff on roughly C$30bn (£16bn; $21.7bn) in American imports, including appliances and fruit juices, in response to US tariffs of 35% on goods outside the existing free trade framework.
Carney said Canada will now remove duties on products covered under the US-Mexico-Canada Agreement (USMCA), restoring duty-free trade for most goods crossing the border.
The White House welcomed the change in a statement to CBS, calling it “long overdue” and expressing hope for continued dialogue on trade and security. Trump later told reporters he plans to speak with Carney again soon.
Domestic criticism and political debate
While polls indicate strong Canadian support for retaliatory tariffs, opposition leaders criticized the move. Conservative Pierre Poilievre accused Carney of abandoning his “elbows up” negotiating style, describing the decision as a retreat.
Carney defended the policy, noting that under USMCA, Canadian exports face an effective tariff rate of about 5.6%, well below the global average of approximately 16%. He emphasized the importance of protecting this advantage for Canadian workers and businesses.
Since January, Trump has imposed or increased tariffs on imports from multiple countries and warned of further hikes to secure deals favorable to the US. US ambassador Pete Hoekstra also cautioned that Canada’s counter-tariffs could jeopardize negotiations and criticized Canadian politicians for personal attacks on Trump and his trade team.
Focus shifts to critical industries
Carney said the next phase of negotiations will prioritize autos, steel, aluminium, and lumber ahead of the scheduled USMCA review next year.
The US currently enforces 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 automobiles will remain in place.
Economists warn that these trade measures are already affecting Canada’s economy. As a major supplier of steel and aluminium to the US, Canadian firms have reported contract cancellations and reduced production. The auto sector is also at risk, given the integrated supply chains across North America. Ontario, the center of Canadian auto manufacturing, has lost 38,000 jobs in the past three months, most in manufacturing.
