TORONTO — In a significant trade development, Prime Minister Mark Carney announced on Friday that Canada will eliminate retaliatory tariffs in alignment with U.S. tariff exemptions outlined in the United States-Mexico-Canada Agreement (USMCA).
This strategic move is intended to reset trade relations between Canada and the United States, as both countries prepare for a review of the USMCA scheduled for 2026.
During a phone conversation with President Donald Trump on Thursday, Carney discussed the importance of collaboration under the trade pact and the advantages it brings to Canada.
Carney emphasized, “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.”
The USMCA protects a vast majority of goods from tariffs, with more than 85% of Canada-U.S. trade remaining tariff-free. However, certain sector-specific tariffs, known as 232 tariffs, still affect Canadian imports, including a substantial 50% tariff on steel and aluminum.
According to Carney, the U.S. commitment to the core tenets of the USMCA means that the average tariff rate on Canadian goods is one of the lowest among its trading partners.
He stated, “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.”
Former Prime Minister Justin Trudeau had initially imposed retaliatory tariffs in response to U.S. trade actions. However, these tariffs were challenged when the Trump administration granted exemptions for goods covered by the USMCA before any tariffs were enacted.
With over 75% of Canada’s exports heading to the U.S., retaining free trade is crucial for the Canadian economy. Meanwhile, over 80% of Mexico’s exports are also directed towards the U.S., highlighting the interconnectedness of trade within North America.
Despite the perceived progress, some critics argue that Canada’s decision to drop retaliatory tariffs represents a retreat. Lana Payne, president of Unifor, Canada’s largest private sector union, voiced her concerns via social media.
Payne stated, “Trump’s attacks on the auto, steel, aluminum, and forestry sectors are hurting Canadian workers in real time. Walking back counter-tariffs isn’t an olive branch. It only enables more U.S. aggression.”
Carney previously abandoned plans to impose taxes on U.S. technology firms after tensions escalated with President Trump, who described the plans as a “direct and blatant attack on our country.”
Looking ahead, Carney pointed out that preparations are being made for the upcoming review of the free trade agreement, signaling that Canada is not simply acquiescing to U.S. demands but is instead aiming for a balanced approach.
In conclusion, the recent decision to align with U.S. tariff exemptions under the USMCA is a defining moment in Canada-U.S. trade relations, as both countries navigate the complexities of their economic partnership.
image source from：npr
