Ottawa will lift some retaliatory duties while retaining tariffs on vehicles, steel, and aluminium.
Prime Minister Mark Carney announced Friday that Canada will reduce a portion of its trade retaliation against the United States. Levies on autos, steel, and aluminium will remain, but other tariffs on American goods 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 failed to meet their self-imposed deadline for a new trade pact. 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 US tariffs of 35% on products not covered by the existing free trade deal.
Carney said Canada will now eliminate tariffs on goods covered under the US-Mexico-Canada Agreement (USMCA), restoring duty-free trade for most cross-border shipments.
The White House welcomed the move in a statement to CBS, calling it “long overdue” and expressing optimism about further discussions on trade and national security. Trump later told reporters he plans to speak with Carney again soon.
Domestic reaction and political debate
Although polls show strong Canadian support for retaliatory tariffs, opposition leaders criticized the decision. Conservative Pierre Poilievre said Carney had abandoned his “elbows up” negotiating stance, describing the move as a retreat.
Carney defended the policy, noting that USMCA gives Canadian exporters an effective tariff rate of around 5.6%, well below the global average of roughly 16%. He stressed that protecting this advantage is crucial for Canadian workers and businesses.
Since January, Trump has implemented 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 said Canada’s counter-tariffs risked complicating negotiations and criticized Canadian politicians for focusing on personal attacks against Trump rather than policy.
Focus moves to key industries
Carney said future negotiations will concentrate on autos, steel, aluminium, lumber, and other major sectors ahead of next year’s scheduled USMCA review.
The US currently imposes 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 effect for now.
Economists warn that these 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 reductions. The auto sector is also under strain, 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 in the past three months, most in factories.
