Image Credit: X account @MarkJCarney
Canada Drops Most Tariffs on U.S. Goods
On August 22, 2025, Canadian Prime Minister Mark Carney confirmed that Canada will remove most of its retaliatory tariffs on U.S. goods. The rollback will take effect from September 1 and is aimed at reducing tensions with Washington after months of trade friction.
Focus on USMCA-Compliant Items
The tariff removal applies to U.S. goods covered under the United States–Mexico–Canada Agreement (USMCA). Products such as agricultural items, machinery, and consumer goods are part of the relaxation. However, tariffs on steel, aluminum, and automobiles will continue, as Canada maintains leverage in those sensitive industries.
Shift in Trade Strategy
Carney explained that the move was designed to restart dialogue with the U.S. and show goodwill after American authorities exempted Canadian exports that complied with USMCA standards. The policy shift contrasts with his earlier tough stance during the election campaign, when he emphasized retaliatory action against U.S. measures.
Market Reaction and Political Implications
Following the announcement, the Canadian dollar gained about 0.5% against the U.S. dollar, reflecting investor optimism about easing trade tensions. Analysts said the rollback could help stabilize supply chains and restore confidence in bilateral trade relations.
U.S. Response and Next Steps
U.S. President Donald Trump welcomed Canada’s decision, describing it as a “nice thing” and signaling readiness for broader negotiations. Officials on both sides are now expected to focus on updating provisions of the USMCA, alongside discussions on energy cooperation and border security.
