Canada Eases Trade Tensions by Reducing Retaliatory Tariffs on US Goods

Wed Oct 22 2025 11:51:45 GMT+0300 (Eastern European Summer Time)

Canada announces the removal of some retaliatory tariffs on US imports while maintaining levies on key sectors such as autos and steel.

Canadian Prime Minister Mark Carney's recent decision to drop several retaliatory tariffs against the US signals a shift in trade relations, though tensions remain as levies on critical industries continue. The move, effective September 1, aims to align with US trade agreements and foster better economic ties.

In a recent development on trade relations, Canadian Prime Minister Mark Carney declared on Friday that Canada will reduce some of its billions of dollars in retaliatory tariffs on US products, while maintaining significant tariffs on automobiles, steel, and aluminum. This decision follows a phone conversation between Carney and US President Donald Trump, marking their first discussion since both countries failed to meet a self-imposed deadline for a new trade agreement.

As part of its response to US tariffs—estimated at 35% on products non-compliant with free trade agreements—Canada introduced a 25% tax on nearly C$30 billion (approximately £16 billion or $21.7 billion) worth of US goods, covering a wide range of products, from orange juice to washing machines. Now, Canada plans to lift tariffs on products compliant with the new US-Mexico-Canada free trade agreement (USMCA), in an attempt to "re-establish free trade for the vast majority" of goods traded between the nations, according to Carney. The tariff relief is set to take effect on September 1.

The White House welcomed Canada's announcement, calling it a much-anticipated move and expressing eagerness for ongoing discussions regarding trade and national security. Trump later mentioned in a press briefing the likelihood of further conversations with Carney soon.

Polls indicate that many Canadians support retaliatory tariffs, and during the recent election, Carney was known for his assertive negotiation tactics with the US, akin to the "elbows up" style used in ice hockey. However, Conservative Party leader Pierre Poilievre criticized Carney's decision as a capitulation, questioning the strength of the Prime Minister's negotiation stance.

Despite Carney's assertion that Canada benefits from a better tariff arrangement with the US—approximately 5.6% compared to the average of 16% for other international partners—the looming tariffs on steel and automotive imports remain contentious. The US has enacted a hefty 50% tariff on steel and aluminum, creating disruptions for Canadian suppliers. Contracts have been canceled, and Canadian staffing in manufacturing has dwindled, with the Ontario auto sector reporting losses of around 38,000 jobs in recent months.

With the US-Canada trade landscape continuously evolving, both nations now look to accelerate negotiations around crucial sectors ahead of a planned review of the USMCA next year.