Prime Minister Mark Carney said Friday that Canada will lift many of its retaliatory tariffs on U.S. goods that fall under free trade rules, after agreeing with U.S. President Donald Trump to “intensify” stalled trade talks.
Canadian counter-tariffs on U.S. autos, steel and aluminum will remain for now, Carney said, describing the move as a bid to “match” Trump’s tariffs on Canada that will take effect starting next week.
“As we work to address outstanding trade issues with the United States, it’s important — it’s vital — we do everything we can to preserve this unique advantage for Canadian workers, Canadian businesses,” Carney told reporters in Ottawa.
“In short, the situation we’re in now is that Canada and the United States have re-established free trade for the vast majority of our goods.”
Carney’s announcement comes a day after he held what he called a “productive” call with Trump, their first known discussion since Trump raised tariffs on Canada to 35 per cent on Aug. 1.
Those tariffs only to apply to Canadian goods that fall outside the Canada-United States-Mexico Agreement on free trade (CUSMA), continuing an exemption Trump first announced in the spring.
Canada had kept its counter-tariffs on nearly $30 billion of U.S. goods that fall under the free trade pact, including orange juice and microwaves, despite Trump’s CUSMA carve-out.
Carney said those tariffs will no longer apply starting Sept. 1.
“We welcome this move by Canada, which is long overdue,” a White House official told Global News on background.
“We look forward to continuing our discussions with Canada on the administration’s trade and national security concerns.”
Asked Friday if he received assurances from Trump that the move will kickstart negotiations toward a new trade and security agreement, Carney replied, “Yes.”
U.S. Ambassador to Canada Pete Hoekstra had complained about Canada’s counter-tariffs on U.S. goods that fall under CUSMA, also known as the USMCA, in an interview with Global News last week.
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“Canada is the country that has pulled the rug out from USMCA,” Hoekstra said.
“They also started putting tariffs on CUSMA products … We haven’t done that, but Canada has decided ‘That’s fair game. We will call into question CUSMA.’”
The removal of Canada’s counter-tariffs come after the federal government rescinded its controversial digital services tax following Trump’s threats to end trade talks altogether.
Canada also hasn’t raised its counter-tariffs on steel and aluminum after Trump raised his global tariffs on those products to 50 per cent, despite promises from Carney to “adjust” them in the near future.
Asked by Global News if he was appeasing Trump with these moves on Friday, Carney said the goal was to match U.S. tariff policies while setting the stage both for the current trade and security negotiations and next year’s scheduled CUSMA review.
“The president and I had a long conversation yesterday and we see the opportunity to build on where the relationship already is,” he said.
“We intend to advance those discussions as rapidly as possible. The foundation is very strong, the opportunity is great and we want to focus on those opportunities.”
Carney said “I reject your characterization of what I’m saying” when pressed on whether he is asking Canadians to accept the best of a bad deal, after urging Canadians to put their “elbows up” in its dispute with the U.S.
“We have the best deal with the United States right now,” he said. “We have the best deal. Look at the numbers. Our tariff rate is 5.5 per cent. We have 85 per cent of our our goods that are free trade — it’s not what we used to have, (but) nobody has a deal with the United States that they used to have.
“With this decision, we’re respecting our agreement with the United States and we are matching what they have done. That puts us in a good position for the next phase of these negotiations.”
Carney added the move doesn’t conflict with his “elbows up” pledge, describing the negotiations as a long hockey game.
“There is a time in a big game, and this is a big game, when you go hard in the corners, the elbow is up, we drop the gloves in the first period and just send a message,” he said. “And we’ve done that pretty uniquely in the world.
“But there’s also a time in a game where you want the puck, you want to stick handle, you want to pass, you want to put the puck in the net. And we’re moving later into the game, and we’re at that time in the game, and that’s where the engagement is.”
Carney said Thursday that he and Trump “focused on trade challenges, opportunities, building a new economic and security relationship between Canada and the U.S., and supporting long-term peace and security for Ukraine and Europe” in a post on social media that called the discussion “substantive and lengthy.”
A statement from the Prime Minister’s Office said Trump and Carney “agreed to reconvene shortly.”
The White House said the duties increased because Ottawa did not do enough to curb the flow of fentanyl and pointed to Canada’s implementation of retaliatory tariffs.
“There’s two countries that have been relatively harsh against the United States, and that’s China and Canada,” Hoekstra told Global News last week. China has also faced increased U.S. tariffs compared to other countries.
Data from the U.S. Customs and Border Protection agency shows a minuscule amount of fentanyl is seized at the northern border compared to the border with Mexico, though seizures from Canada spiked this spring.
Foreign Affairs Minister Anita Anand and U.S. Secretary of State Marco Rubio also held their first official meeting in Washington on Thursday, after Anand took over the portfolio in May.
The two discussed Ukraine, Gaza, Haiti and China, according to readouts from their offices, which did not mention the ongoing trade war.
—With files from Global’s Reggie Cecchini and Mackenzie Gray
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