OTTAWA, Canada — Prime Minister Mark Carney announced on Friday, August 22, that Canada will remove most retaliatory tariffs on U.S. goods while keeping duties on steel, aluminum, and automobiles. The move comes as Ottawa intensifies negotiations with Washington on a new trade and security partnership.
What’s Changing?
Canada will eliminate tariffs on U.S. goods covered under the Canada-U.S.-Mexico Agreement (CUSMA) by September 1. Carney noted that the U.S. has clarified it will not impose duties on Canadian goods that comply with the free trade pact.
However, tariffs on strategic sectors, including steel, aluminum, and autos, will remain temporarily as negotiations continue. Carney described the approach as a “moderate” step aimed at balancing Canada’s trade interests while pursuing a stronger bilateral relationship with the U.S.
Background of the Trade Dispute
Canada imposed retaliatory tariffs in March 2024 on C$30 billion ($21 billion) worth of U.S. goods in response to higher U.S. tariffs on steel, aluminum, and other sectors. Remaining tariffs on an additional C$125 billion of goods were delayed, pending further negotiations.
Carney emphasized that 85% of trade with the U.S. remains tariff-free, a better outcome than what many other nations enjoy.
Embed from Getty ImagesNegotiations and Economic Implications
Canada and the U.S. have been discussing a broader trade and security arrangement for months, though a final deal is still distant. A former government official warned that U.S. demands remain extensive.
Business leaders, including Goldy Hyder, president of the Business Council of Canada, stressed the importance of successfully reviewing and renewing CUSMA to protect Canadian businesses and the economy.
Political Considerations
The announcement comes as Carney’s Liberal government holds only a minority in the House of Commons, relying on opposition support for key votes. Conservative leaders have criticized the approach as too conciliatory.
Next Steps
Canada will continue negotiations with the U.S., focusing on strategic sectors while preparing for the official CUSMA review, set for July 2026. The government aims to ensure Canada maintains strong trade protections while easing tensions with its southern neighbor.
