Canada has announced it will drop most of its retaliatory tariffs on U.S. goods, with exceptions for steel, aluminum, and automotive products. The move aligns tariff treatment more closely with the trade rules under the United States–Mexico–Canada Agreement (USMCA), leaving the majority of bilateral trade tariff-free.
Officials said the decision reflects a strategy shift, aiming to preserve Canada’s relatively low average tariff exposure compared with other countries while maintaining leverage in negotiations over critical sectors. More than 85% of Canada-U.S. trade is now exempt from additional duties, though targeted tariffs remain in place for industries viewed as strategic.
The announcement comes amid ongoing efforts to ease tensions that have built up over recent U.S. tariff actions and countermeasures by Canada. While Canada emphasized that its approach is no longer one of direct confrontation, leaders underscored that protecting key sectors remains central to its trade policy.
Observers note that scaling back retaliatory measures could open the door to further negotiations on metals, autos, and lumber, while also reinforcing Canada’s position as one of the U.S.’s lowest-tariff trade partners.
