Canada has shown true courage in this trade battle by announcing the repeal of most of its retaliatory tariffs on American products. This major manoeuvre is designed to restore free trade across the region. Prime Minister Mark Carney made this decision public shortly after returning from a hasty phone call with U.S. President Donald Trump after the news of this decision.
Canada is one of only two countries, along with China, that has laid retaliatory levies on U.S. goods. This action is a direct response to the tariffs the U.S. has imposed. For these products, Canada will maintain its tariff on imports, especially for autos, steel and aluminum. It intends to take a new look at its overall approach for most other items. According to published reports, all of these tariffs on goods that are USMCA compliant will be removed, as soon as September 1.
The current average tariff rate on Canadian goods is only 5.6%. This is far less than the average 16% that other countries charge. Canada had already legislated a 25% tariff on about C$30 billion of U.S. exports. This covered everything from orange juice to washing machines. Canada imposed a 25% tariff on US steel and aluminium imports.
Prime Minister Carney emphasized the importance of this decision, stating it would “re-establish free trade for the vast majority” of goods. The Canadian government is now focusing on accelerating negotiations regarding autos, steel, aluminium, and lumber ahead of a scheduled review of the USMCA next year.
This partial relief from some tariffs will not stop Canada from keeping levies on select U.S. imports. Finally, the U.S. has proposed a 35% tariff on all products that do not meet the current free trade agreement. This political maneuver has raised tensions between the two countries to historic levels. According to this national polling, a staggering 83% of Canadians support the idea of retaliatory tariffs against the U.S. This paradox underlines the deep, and sometimes troubling, interdependence between these two major trading partners.
“As we work to address outstanding trade issues with the US, it’s important we do everything we can to preserve this unique advantage for Canadian workers and businesses,” – Mark Carney