Canada Eases Retaliatory Tariffs in Trade Accord with the U.S.
TORONTO (AP) — In a significant shift of trade policy, Prime Minister Mark Carney announced on Friday that Canada will discontinue numerous retaliatory tariffs to align with the U.S. tariff exemptions stipulated under the United States-Mexico-Canada Agreement (USMCA).
Shift in Stance
Carney indicated that Canada will adopt similar exemptions as those enjoyed by U.S. goods under the USMCA, aimed at safeguarding the majority of products from hefty duties. This adjustment marks a departure from Canada’s earlier position of maintaining punitive tariffs until the U.S. eased its own tariffs.
Political Reactions
While some Canadian politicians and labor leaders interpreted Carney’s announcement as a concession, the Prime Minister defended the decision, framing it as a strategic move to stimulate further trade negotiations with Washington.
“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 stated.
Conversations with the U.S. Leadership
In a recent conversation with U.S. President Donald Trump, Carney emphasized the significance of this decision. Trump expressed optimism about resetting trade talks, stating, “We want to be very good to Canada. I like Carney a lot. I think he’s a very good person.”
USMCA and Its Implications
The USMCA, scheduled for review in 2026, gives Canada a substantial advantage in trade at a time when the U.S. is monetizing access to its market. Carney highlighted that over 85% of trade between Canada and the U.S. continues to be tariff-free, with an average tariff rate of 5.6% on Canadian goods, the lowest among all trading partners.
Retaliatory Measures and Ongoing Challenges
Since entering a trade war with the U.S., Canada implemented significant tariffs on a variety of American goods, including alcohol and motorcycles. Despite this, Carney reiterated that Canada will retain certain tariffs, specifically on steel, aluminum, and autos, while efforts are made to address these trade challenges.
“Canada and the United States have reestablished free trade for the vast majority of our goods,” Carney said.
Concerns from Labor and Political Leaders
Reactions from various sectors have been mixed. Lana Payne, the president of Unifor, expressed concerns that the decision represents a retreat, especially as the ongoing tariffs impact Canadian workers directly. Opposition leader Pierre Poilievre also labeled the move as capitulation, advocating for a more assertive approach with the U.S. to eliminate all tariffs.
“Any small tariff on Canada, any amount, by the United States has an outsized effect because more than 20% of our economy is exports to the U.S.,” Poilievre noted.
Conclusion
As Canada navigates complex trade relationships, this decision to align with U.S. tariffs presents both opportunities for renewed dialogue and challenges in addressing domestic concerns surrounding the implications for Canadian workers. The path forward will be closely watched as both nations seek to optimize trade relations under the framework of the USMCA.
