Canada will drop retaliatory tariffs to match U.S. exemptions for goods covered by the United States-Mexico-Canada Agreement, Prime Minister Mark Carney said Friday, aligning Ottawa’s policy with Washington’s carve-outs under the 2020 pact.
“Canada currently has the best trade deal with the United States. And while it’s different from what we had before, it’s still better than that of any other country,” Carney said.
The announcement followed a phone call Thursday between Carney and President Donald J. Trump and a Friday cabinet meeting. The government cast the step as a way to reset talks with Washington ahead of the USMCA’s 2026 review. Carney said U.S. commitment to the core of the pact means the average tariff rate on Canadian goods is among the lowest and that more than 85 percent of Canada-U.S. trade remains free of tariffs. Canadian and Mexican companies can claim preferential treatment under the agreement.
The shift departs from the approach of former Prime Minister Justin Trudeau, who imposed counter-tariffs after new U.S. duties were announced. Before those took effect, the Trump administration exempted goods covered by the free-trade deal. Ottawa will now formally match that treatment.
Frictions remain around sector-specific national-security duties. The United States has imposed so-called Section 232 tariffs that apply to Canada despite the USMCA, including a 50 percent levy on steel and aluminum imports.
“Canada and the United States have reestablished free trade for the vast majority of our goods. Canada will retain our tariffs on steel, aluminum and autos as we work intensivily [sic] to resolve the issues there,” Carney said.
Carney earlier withdrew a plan to tax U.S. technology companies after Mr. Trump said he was suspending trade talks with Canada over the proposal, calling it “a direct and blatant attack on our country.”
Labor leaders criticized the move. Lana Payne, president of Unifor, Canada’s largest private-sector union, said the government should not retreat unless all punitive U.S. tariffs are lifted. “Trump’s attacks on auto, steel, aluminum, and forestry sectors are hurting Canadian workers in real time,” she wrote on social media. “Walking back counter-tariffs isn’t an olive branch. It only enables more U.S. aggression.”
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