Ottawa will lift certain retaliatory duties while maintaining tariffs on cars, steel, and aluminium.
Prime Minister Mark Carney announced Friday that Canada will reduce a portion of its trade countermeasures against the United States. While tariffs on vehicles, steel, and aluminium will remain, other duties on American products will be removed starting September 1.
Decision comes after missed trade deadline
The announcement follows Carney’s first phone conversation with President Donald Trump since both countries failed to meet their self-imposed deadline for a new trade agreement. Previously, Canada had 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 outside the existing free trade framework.
Carney said Ottawa will now eliminate tariffs on items covered under the US-Mexico-Canada Agreement (USMCA), restoring mostly duty-free trade for the majority of goods 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 national security. Trump later told reporters he expects to speak with Carney again soon.
Political debate and domestic response
Although polls indicate Canadians broadly support retaliatory tariffs, opposition leaders criticized the decision. Conservative leader Pierre Poilievre accused Carney of abandoning his “elbows up” negotiating stance, calling the move a retreat.
Carney defended the policy, pointing out that under USMCA, Canadian exporters face an effective tariff rate of about 5.6%, far below the global average of around 16%. He stressed the importance of maintaining this advantage for Canadian workers and businesses.
Since January, Trump has implemented or raised tariffs on goods from multiple countries and warned of additional increases to secure deals favorable to the US. US ambassador Pete Hoekstra said Canada’s counter-tariffs risk complicating negotiations and criticized Canadian politicians for focusing on personal attacks rather than trade policy.
Focus shifts to major sectors
Carney said the next stage of negotiations will concentrate on autos, steel, aluminium, lumber, and other significant industries 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 cars will remain in place for now.
Economists warn 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 production cuts. The auto industry is also under pressure, as vehicles frequently cross borders between the US, Canada, and Mexico during assembly. Ontario, Canada’s automotive hub, has lost 38,000 jobs in the past three months, mostly in manufacturing.
