Canada Drops Retaliatory Tariffs to Match U.S. USMCA Exemptions

Canadian Prime Minister Mark Carney announced Friday that Canada is removing many retaliatory tariffs to align with U.S. tariff exemptions under the United States-Mexico-Canada trade agreement. The Move: Canada will now match the carve-out the U.S. provides to Canadian goods under the 2020 free trade deal, shielding the vast majority of goods from punitive duties. Carney's Rationale: The Prime Minister framed this as advantageous for Canada, stating: "Canada currently has the best trade deal with the United States." He noted that over 85% of Canada-U.S. trade remains tariff-free, with the U.S. average tariff rate on Canadian goods at 5.6%—the lowest among U.S. trading partners. Strategic Context: Carney said Trump told him that lifting tariffs would reset trade negotiations, with the USMCA facing review in 2026. Political Opposition: Union leaders and Conservative opposition politicians criticized the decision as capitulation. Unifor president Lana Payne contended: "Walking back counter-tariffs isn't an olive branch. It only enables more U.S. aggression." Exceptions: Canada retained tariffs on steel, aluminum, and automobiles while working to resolve related issues.