Prime Minister Mark Carney announced Aug. 22 that Canada will remove all of its tariffs on imports of U.S. goods specifically covered under the U.S.-Mexico-Canada Agreement as of Sept. 1. Canada will retain its tariffs on U.S. steel, aluminum, and automobiles, which at 25 percent are half of the 50 percent the U.S. assesses on such goods from Canada.
Carney noted that the U.S. recently “reaffirmed a core commitment” to the USMCA “by reinforcing that those Canadian exports to the United States that are compliant” with that agreement will not subject to U.S. import tariffs imposed under the International Emergency Economic Powers Act. Canada therefore currently has “the best trade deal” with the U.S. of any of its other trading partners, Carney said, with an average U.S. tariff rate on Canadian goods of 5.6 percent (compared to nearly 16 percent for the world in general) and more than 85 percent of two-way trade now tariff-free.
However, Carney added, “it is important we do everything we can to preserve this unique advantage,” which is why Canada is further lowering its tariffs on most imports from the U.S. Carney indicated that Ottawa is taking this step with an eye toward facilitating intensified discussions with the U.S. on “current trade challenges in strategic sectors” as well as enhancing its position ahead of the USMCA review process scheduled to launch in 2026.
At the same time, recognizing that the decades-long process of integrating and connecting the U.S. and Canadian economies “is now over,” Carney said Canada is also focusing on (1) a new comprehensive industrial strategy that “protects Canadian jobs, boosts Canadian competitiveness, buys Canadian goods, and diversifies Canadian exports” in strategic sectors, (2) “trade, investment, and security partnerships that preserve our sovereignty,” and (3) striking new trade deals “that are robust to different economic circumstances and governments because of mutual benefits to both countries.”
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