Canada to Remove Retaliatory Tariffs Following US Exemptions

Canada is set to eliminate retaliatory tariffs in alignment with US exemptions on goods as part of the US-Mexico-Canada Agreement (USMCA). Prime Minister Mark Carney spoke on this development on Friday, noting that the Canadian government will incorporate Washington’s sculptures into their 2020 trade policy.

“At this point, Canada holds the most favorable trade agreement with the US. While it’s not the same as before, it’s still more advantageous than any other arrangement,” Carney remarked.

This news came after Carney’s discussion with President Donald J. Trump on Thursday, followed by a cabinet meeting the next day. The administration views these steps as a means to reset discussions with the US ahead of the 2026 USMCA review. Carney emphasized that the US’s adherence to the core agreement contributes to the lowest average tariff rate on Canadian goods, with over 85% of Canada-US trade remaining tariff-free. This structure allows Canadian and Mexican companies to seek preferential treatment via contracts.

This new approach marks a shift from the previous administration under Justin Trudeau, who had imposed counter-tariffs following the announcement of new US job tariffs. Before they were put in place, the Trump administration had already exempted certain goods eligible for free trade. Ottawa is now officially aligning its policies accordingly.

However, tensions persist, particularly regarding certain sector-specific national security measures. The US has enacted Section 232 tariffs that apply to Canada, even within the framework of the USMCA.

“Canada and the US have reinstated free trade for most goods. Canada still maintains tariffs on steel, aluminum, and automobiles — which we are working hard on. So, I guess we need to find a solution to this,” Carney stated.

Previously, Carney had decided against imposing taxes on US tech companies after Trump halted trade talks over that proposal, labeling it a “direct and blatant attack on our country.”

Labor leaders have expressed discontent with this decision. Lana Payne, the president of Unifor, Canada’s largest private sector union, stated that the government should not backtrack unless all punitive US tariffs are abolished.

“Trump’s actions regarding cars, steel, aluminum, and forestry are impacting Canadian workers right now,” she posted on social media. “Backtracking through the counter-tariff is not a form of goodwill. It merely opens the door for further US assaults.”