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Prime ministers

Canada Drops Retaliatory Tariffs on Some U.S. Products in Bid to Reset Trade Talks

Strategic Insights

— 2 min read

In a significant move to reset stalled trade talks with the White House, Prime Minister Mark Carney announced that Canada will be removing retaliatory tariffs on some U.S. products, effective September 1. This decision is seen as a bid to ease tensions and move the trade negotiations forward. The move comes after a phone call between Mr. Carney and U.S. President Donald Trump, their first in months, and as both countries prepare to renegotiate the United States-Mexico-Canada Agreement (USMCA). The Canadian government will maintain its countertariffs on steel, aluminum, and autos, but will remove tariffs on U.S. goods that comply with North American free-trade deal rules. Mr. Carney stated that Canada will focus on finding relief for the hardest-hit sectors, such as steel, aluminum, and autos, which have been impacted by U.S. sectoral duties.

Key Takeaways:

  • Canada will remove retaliatory tariffs on some U.S. products, effective September 1, in an effort to reset stalled trade talks with the White House.
  • The tariffs being removed will apply to U.S. goods that comply with North American free-trade deal rules.
  • Canada will maintain its countertariffs on steel, aluminum, and autos, which have been hammered by U.S. sectoral duties.
  • The Canadian government will focus on finding relief for the hardest-hit sectors, including steel, aluminum, and autos.
  • The move comes after a phone call between Prime Minister Mark Carney and U.S. President Donald Trump, their first in months.
  • The Canadian government has begun consultations around USMCA renewal, with the goal of preserving the agreement and focusing on areas where mutual benefits are clear.
  • The USMCA carve-out has shielded much of the Canadian economy, with around 85% of exports entering the U.S. free of duties, making the average U.S. effective tariff rate on Canadian goods only 5.6%.
  • Prime Minister Carney emphasized that Canada currently has the best trade deal with the United States, despite the trade war, and has secured a number of exemptions for Canadian products.

Statistics:

  • 85% of Canadian exports are able to enter the U.S. without duties, thanks to the USMCA carve-out.
  • The average U.S. effective tariff rate on Canadian goods is 5.6% thanks to the USMCA carve-out.
  • Canada has imposed three rounds of countertariffs on U.S. goods this year, covering nearly $100 billion worth of exports.
  • Steel, aluminum, and autos have been hammered by U.S. sectoral duties, with tariffs ranging from 25% to 50%.
  • The Canadian government will maintain its countertariffs on steel, aluminum, and autos, but will remove tariffs on U.S. goods that comply with North American free-trade deal rules.

Sources:

  • The Globe and Mail, Mark Carney, ADRIAN MORROW, BILL CURRY, Byline: MARK RENDELL
  • The Canadian Press, Catherine Fortin LeFaivre, Goldy Hyder, Lana Payne

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