Canada is dropping retaliatory tariffs to match U.S. tariff exemptions for items coated below the United States-Mexico-Canada commerce pact, Prime Minister Mark Carney introduced on Friday (August 22, 2025).
Mr., Carney mentioned Canada will embrace the carve-out that the U.S. has on Canadian items below the 2020 free commerce deal that shields the overwhelming majority of products from the punishing duties.
“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,” Mr. Carney mentioned.
The transfer is designed to reset commerce talks between the 2 international locations. The USMCA is up for evaluation in 2026, and Carney referred to as the commerce pact a novel benefit for Canada at a time when it’s clear that the U.S. is charging for entry to its market.
Carney mentioned the dedication of the U.S. to the core of USMCA means the U.S. common tariff price on Canadian items stays certainly one of its lowest, and that over 85% of Canada-U.S. commerce continues to be freed from tariffs.
Canadian and Mexican corporations can declare preferential therapy below the USMCA.
Former Prime Minister Justin Trudeau initially placed on retaliatory tariffs in response to U.S. tariffs, however earlier than the U.S. tariffs have been utilized the Trump administration exempted items coated by the free commerce deal.
Most imports from Canada and Mexico are nonetheless protected by the USMCA, however U.S. Commerce Secretary Howard Lutnick has mentioned, “I think the president is absolutely going to renegotiate USMCA.”
Preserving the free commerce pact will be vital for Canada and Mexico. More than 75% of Canada’s exports go to the U.S. whereas greater than 80% of Mexico’s exports go there.
Mr. Trump has introduced some sector specific-tariffs that do apply for Canada regardless of the USMCA — referred to as 232 tariffs — that are having an affect on the Canadian economic system. There is a 50% tariff on metal and aluminum imports, for instance.
“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 intensivily to resolve the issues there,” Mr. Carney mentioned.
