Updated @ 5:42 PM EDT on August 22, 2025
TORONTO Prime Minister Mark Carney said Friday that Canada is removing a large number of its retaliatory tariffs in order to match the United States’ tariff exclusions for items included by the trade agreement between the United States, Mexico, and Canada.
Carney said that Canada will ease its previous position of holding the line on punitive tariffs until U.S. President Donald Trump budges more on those imposed by the U.S. by incorporating the carve-out that the U.S. has on Canadian goods under the 2020 free trade agreement, which protects the vast majority of goods from the punishing duties.
The prime minister highlighted what he saw as Canada’s advantageous position thus far and claimed that the exemptions will spark more trade negotiations with Washington, despite some Canadian lawmakers and union leaders characterizing Carney’s action as capitulation.
“At the moment, Canada and the US have the best trade agreement. Even while it’s not the same as what we had previously, it’s still superior to that of any other nation,” Carney stated.
Prior to making the decision, Carney met with his Cabinet on Friday and had a phone conversation with Trump on Thursday.
“We had a very good call,” Trump stated in the White House on Friday. “We have a project underway. We wish to treat Canada with the utmost kindness. I really like Carney. He seems like a really decent guy to me. He additionally stated: “I am fighting for the United States, and Canada and Mexico have taken a lot of our business over the years.”
Trump promised to restart trade talks if the tariffs were lifted, according to Carney. Carney described the United States-Mexico-Canada trade agreement, or USMCA, as a special advantage for Canada at a time when it is evident that the United States is charging for access to its market. The agreement is set to be reviewed in 2026.
According to Carney, more than 85% of trade between the United States and Canada is still tariff-free because of the United States’ commitment to the core of the USMCA. According to him, the U.S. has the lowest average tariff rate of any of its trading partners on Canadian exports, at 5.6%.
Under the USMCA, businesses from Canada and Mexico are eligible to receive preferential treatment.
The only nations that have responded to Trump’s trade war are China and Canada. In March, Canada levied 25% tariffs on a wide range of American products, such as cosmetics, motorcycles, apparel and shoes, whiskey, and oranges.
Prior to the imposition of U.S. tariffs, the Trump administration exempted items covered by the free trade agreement, but former Prime Minister Justin Trudeau first imposed retaliatory tariffs in reaction to U.S. tariffs.
The USMCA currently protects the majority of imports from Canada and Mexico, but according to U.S. Commerce Secretary Howard Lutnick, “I think the president is absolutely going to renegotiate USMCA.”
For Canada and Mexico, maintaining the free trade agreement will be essential. The United States is the destination of over 80% of Mexico’s exports and over 75% of Canada’s.
The Canadian economy is being impacted by the 232 tariffs that Trump imposed, which are sector-specific levies that do apply to Canada even in spite of the USMCA. For instance, imports of steel and aluminum are subject to a 50% duty.
“Canada and the United States have reestablished free trade for the vast majority of our goods,” Carney stated. “Canada will retain our tariffs on steel, aluminum and autos as we work intensively to resolve the issues there.”
In the past, Carney canceled Canada’s proposal to impose taxes on American tech companies after Trump declared he was halting trade negotiations with Canada over the plans, calling them “a direct and blatant attack on our country.”
The prime minister refuted the idea that Canada is supporting Trump, pointing out that Canada is doing the same as the United States.
“The president and I had a long conversation,” Carney stated. “The free trade deal will be reviewed in the spring. We are beginning the process of getting ready.
Canada shouldn’t back down unless the United States removes all discriminatory tariffs, according to Lana Payne, head of Unifor, the country’s largest private sector union, who described Carney’s announcement as such.
She said on social media that “Trump’s attacks on the auto, steel, aluminum, and forestry sectors are hurting Canadian workers in real time.” “Removing counter-tariffs is not a good idea. It just makes further American aggressiveness possible.
Pierre Poilievre, the leader of the opposition Conservatives, referred to it as Carney’s surrender. According to Poilievre, he would have politely requested that the president of the United States lift all of the 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.,” he stated.
Copyright 2025 NPR
