Canada Backs Down: Lifts Retaliatory Tariffs on U.S. Goods to Ease Tensions with Trump

Canada has announced a major shift in trade policy – lifting 25% retaliatory tariffs on U.S. consumer goods that qualify under the USMCA trade pact. The move aims to ease tensions with Trump’s White House and send a strong signal ahead of the upcoming review of the agreement.

Carney Steps Back in Trade War Prime Minister Mark Carney is set to confirm the decision following a cabinet meeting. Products that fall under the USMCA framework will now enter Canada duty-free. However, the 25% tariffs on U.S. steel, aluminum, and vehicles remain in place – key sectors that Trump targeted during his first term. The decision comes just one day after Carney and Donald Trump spoke on the phone for the first time in weeks. According to analysts, Ottawa is signaling that USMCA remains a top priority while laying the groundwork for negotiations.

From Trudeau’s Hardline to Carney’s Retreat The trade dispute began under former Prime Minister Justin Trudeau, who retaliated against U.S. tariffs by slapping 25% duties on $30 billion worth of American imports – from orange juice to motorcycles. A second wave followed, targeting steel, aluminum, and more consumer products. Carney entered office with tough rhetoric, promising “maximum harm” to the U.S. if Washington kept interfering with Canada’s economy. But his approach quickly shifted. By April, his finance minister allowed exemptions for certain companies and automakers in exchange for commitments to production and investment in Canada. The focus moved from confrontation to strategic compromise.

Trump Applies Pressure, Ottawa Holds Back Meanwhile, Trump doubled tariffs on steel and aluminum to 50% and in August imposed the so-called “fentanyl tariff,” raising duties on Canadian goods from 25% to 35%. Yet Carney did not respond with countermeasures – unlike Trudeau, he now prefers negotiation over escalation.

Minimal Impact on Canadians Despite the heated rhetoric, the real impact on Canadian households was limited. According to Statistics Canada, the consumer price index rose only 1.7% year-on-year in July, still below the Bank of Canada’s 2% inflation target. Analysts at Scotiabank estimate that the effective average U.S. tariff on Canadian goods, thanks to USMCA exemptions, remains under 7%.

A Signal Before the Next Round of Talks Canada’s move is therefore largely symbolic – a political gesture to calm tensions, reopen the door to dialogue, and show that Ottawa prefers deals over trade wars. Carney has made it clear: his goal is no longer escalation, but pragmatic stabilization of relations with Trump’s administration.

#Canada , #TradeWar , #TRUMP , #Tariffs , #economy

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