In a significant move toward restoring trade relations, Prime Minister Mark Carney announced that Canada will ease some of its retaliatory tariffs on US goods. This decision, communicated on Friday, allows for a reduction of millions in tariffs while retaining imposed taxes on crucial sectors like automobiles, steel, and aluminum. This announcement follows a phone discussion between Carney and President Donald Trump, marking their first communication since the countries failed to meet a trade agreement deadline.
Previously, Canada had enforced a 25% tariff on roughly C$30 billion (approximately $21.7 billion) worth of US products—spanning items from orange juice to washing machines—as retaliation against US tariffs that reached 35% on non-compliant goods. With the adjustments, Canada aims to align its tariffs with the US-Mexico-Canada Free Trade Agreement (USMCA) starting September 1, 2023. This change is expected to "re-establish free trade" for the majority of traded goods between the two countries, according to Carney.
The White House has expressed enthusiasm for the development, labeling it as "long overdue", and anticipates continued discussions on trade and national security with Canada. As part of the ongoing trade battle under the Trump administration, Canada and China were among the few countries levying retaliatory tariffs on the US.
Polling indicates that many Canadians favor maintaining these tariffs against US products. Carney, whose election campaign emphasized a proactive strategy when negotiating with Trump, defended the need for Canada to preserve favorable tariff conditions. He highlighted that Canada's effective tariff rate on US goods is substantially lower than that faced by other nations, with plans to focus on contentious sectors such as automobiles and steel in the upcoming review of the USMCA next year.
An overview of current trade tensions reveals that the US has implemented significant tariffs on Canadian steel, aluminum, and other imports. While some Canadian tariffs on US products will be lifted, those on steel, aluminum, and autos will remain in action for the time being as both nations continue to navigate their complex trade dynamics.
