Canadian Prime Minister Mark Carney announced the removal of retaliatory tariffs on U.S. goods covered by the U.S.-Mexico-Canada Agreement (USMCA), aiming to strengthen trade and security ties with the United States, as reported by Reuters. Tariffs on U.S. autos, steel, and aluminium will remain, pending further negotiations.
Carney revealed that the U.S. decision not to impose tariffs on USMCA-compliant Canadian goods prompted Canada to reciprocate, effective September 1, 2025. “Canada and the U.S. have now re-established free trade for the vast majority of our goods,” he stated at an Ottawa press conference. The move boosted the Canadian dollar by 0.5% to C$1.3837 against the U.S. dollar by 12:40 PM, per Reuters.
PM Carney announces Canada will drop its retaliatory tariffs against the United States.
Starting next month, Canada will "match the United States" and remove tariffs "on US goods specifically covered" under the existing USMCA trade deal, Carney says. pic.twitter.com/KIGdUBfK4i
— Rebel News (@RebelNewsOnline) August 22, 2025Following a Thursday call with President Donald Trump, Carney confirmed that lifting tariffs would “kick start” trade talks, which have been ongoing for months without a deal. A White House official welcomed the decision, calling it “long overdue,” and expressed readiness to address trade and security concerns.
Elected in April 2025 on a promise to counter Trump’s tariffs, Carney has softened his stance, scrapping a digital services tax in June and dropping sanction threats in July. Using a hockey analogy, he noted, “It’s time for a moderate approach.” Carney emphasised that Canada enjoys the lowest U.S. tariff rate globally at 5.6%, with 85% of trade tariff-free, per CBC News.
The tariff decision poses political risks for Carney’s minority Liberal government, reliant on opposition support in the House of Commons. Conservative leader Pierre Poilievre criticised Carney’s “soft” approach, per CBC News. The move reverses $30 billion in tariffs imposed by former Prime Minister Justin Trudeau in March 2025, responding to Trump’s initial duties.
