Prime Minister Mark Carney on Friday announced that Canada is dropping retaliatory tariffs on US goods, aligning with Washington’s recent decision to exempt products covered under the United States-Mexico-Canada Agreement (USMCA).Speaking a day after a call with US President Donald Trump, PM Carney told reporters that starting September 1, Canada would be “eliminating all Canadian tariffs on American goods” covered under the pact.He added this move comes as both countries “intensify” discussions on a broader trade deal.“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.“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 intensively to resolve the issues there,” he added.With the USMCA scheduled for review in 2026, Carney described the pact as a “unique advantage” for Canada, noting that the US is increasingly charging other countries for market access.The Canadian PM noted that America’s commitment to the agreement ensures Canadian exporters still benefit from one of the lowest average US tariff rates, with more than 85% of bilateral trade remaining tariff-free.Canadian and Mexican firms also continue to receive preferential access under the USMCA, AP reported.The retaliatory tariffs were introduced under former Prime Minister Justin Trudeau after Washington imposed duties on Canadian goods. However, the Trump administration later exempted USMCA-covered products, prompting Ottawa’s latest move.While most Canadian and Mexican imports remain protected by the trade pact, US Commerce Secretary Howard Lutnick has signaled fresh uncertainty, saying, “I think the president is absolutely going to renegotiate the USMCA.”Earlier, Trump also signed an executive order raising tariffs on Canadian imports to the United States from 25% to 35%.The tariff applies to all items not covered by the US-Mexico-Canada trade agreement. A 40% transshipment levy would apply to goods rerouted through another country to avoid these tariffs.At the same time, Canada still faces sector-specific US levies outside the deal that continue to weigh on the industry.Since March, Trump implemented various Canadian tariffs: 25% on all goods excluding potash and energy products, 10% on energy resources including potash, 50% on steel and aluminium imports, and 25% on automotive products.Trade experts note that preserving the free trade pact will be crucial for both Canada and Mexico, with more than 75% of Canadian exports and 80% of Mexican exports heading to the US.
