TMTPOST -- Canada will roll back some of its retaliatory tariffs on the United States to push for further trade negotiations with its neighbouring ally.
Credit：Mark Carnety
Canada’s Prime Minister Mark Carney on Friday announced the rollback decision after a meeting with his cabinet. Carney hinted the move is intended to lay the foundation for a review of U.S.-Mexico-Canada Agreement (USMCA) which is expected to begin in the coming months. Ottawa will align with the U.S. by removing its tariffs on goods compliant with the USMCA, said the prime minister.
The tariff adjustment, which will come into effect on September 1, means about C$30 billion ($21.7 billion) worth of U.S. goods, such as orange juice, peanut butter, spirits, motorcycles and other consumer goods , would not face a 25% levy, Canada’s first round of counter-tariff on March 4.
But the 25% retaliatory tariffs on U.S. steel and aluminum and duties on cars and trucks would remain in place. Canada, three weeks following the implementation of its first round of countermeasures, has imposed 25% retaliatory tariffs on additional C$30 billion worth of goods, hitting U.S. steel and aluminum as well as automobiles.
For the Canadian government, the focus now will turn to accelerating talks on autos, on autos, steel, aluminium and lumber, and other significant sectors ahead of review of the USMCA, Carney on Friday said. The Canadian government will begin our preparations for the USMCA review process due next year by launching new consultations starting next month to assess Canadian priorities in the new global trade environment, according to a statement released by the president’s website.
“Canada and the United States have re-established free trade for the vast majority of our goods,” Carney said at a news conference. “Canada will retain our tariffs on steel, aluminum and autos as we work intensively with the US to resolve the issues there.”
Asked if Ottawa was softening its approach to negotiate with Trump, Carney stressed Canada has had a better trade deal with the Trump administration than other trading partners.
“Let’s be clear, Canada currently has the best trade deal with the United States. While it is different from what we had before, it is still better than that of any country. As we work to address outstanding trade issues with the U.S., it is important we do everything we can to preserve this unique advantage for Canadian workers and their families,” said Carney in a statement.
The actual U.S. average tariff rate on Canadian goods is 5.6% and remains the lowest among all its trading partners, and more than 85% of Canada-U.S. trade is now tariff-free, since the U.S. earlier this month reaffirmed the Canadian exports to the U.S. that are compliant with USMCA will not be subject to U.S. tariffs under the International Emergency Economic Powers Act (IEEPA, Carney noted.
The decision to drop 25% tariffs on some U.S. goods marks a major policy shift since Canada was one of a few countries to swiftly hit back at U.S. President Donald Trump’s worldwide trade war. A day before announcement of the decision, Carney had a lengthy phone call with Trump. Carney on Friday confirmed his conversation with Trump and said the president assured him that removing the bulk of the tariffs would help U.S.-Canada trade talks.
Trump on Friday also mentioned the phone call. “We had a very good call,” Trump said in the Oval Office. “We are working on something. We want to be very good to Canada. I like Carney a lot. I think he’s a very good person." The president also said he will soon talk with Carney over the phone again.
A White House official said the administration welcomed Canada’s decision, “which is long overdue,” the Wall Street Journal reported. The White House said in a statement that the U.S. looks forward to continuing discussions with its northern neighbour about trade and national security
U.S. Commerce Secretary Howard Lutnick was reported to urge his Canadian counterparts to scale back tariffs to clear the way for bilateral negotiations. Lutnick told the Canadians that the counter-tariffs were a barrier to full talks and that it left them in a poor negotiating position, while the U.S. gave nothing in return, Bloomberg cited a person familiar with the matter.
