OTTAWA, August 25, 2025 — In a significant policy shift, Canadian Prime Minister Mark Carney announced on Friday that Canada will remove most retaliatory tariffs on U.S. goods effective September 1, aligning with exemptions under the U.S.-Mexico-Canada Agreement (USMCA). The decision, following a Thursday call with President Donald Trump, marks a retreat from Canada’s earlier hardline stance and is being hailed as a diplomatic victory for the Trump administration. Tariffs on U.S. steel, aluminum, and autos, however, will remain as negotiations continue.
The move comes after Trump imposed 25% tariffs on Canadian goods in February, citing border security and fentanyl concerns, later raising them to 35% for non-USMCA-compliant imports. Canada retaliated with 25% levies on $21.7 billion in U.S. goods, escalating tensions. Carney’s decision to drop tariffs on USMCA-compliant goods, covering 85% of Canada’s exports, aims to ease economic strain and preserve Canada’s favorable trade status, with an effective U.S. tariff rate of 5.6%, the lowest among trading partners.
Critics, including Conservative leader Pierre Poilievre, slammed Carney for weakening Canada’s leverage, while business groups welcomed the relief, noting the tariffs’ harm to Canadian firms. Trump called the move “nice” and expressed optimism about future talks, signaling a thaw in relations. The decision sets the stage for critical USMCA renewal talks in 2026, with economists warning that ongoing sector-specific tariffs could still disrupt Canada’s auto and metal industries.
