Report: Canada to Remove Retaliatory Tariffs on CUSMA-Compliant U.S. Goods

Report: Canada to Remove Retaliatory Tariffs on CUSMA-Compliant U.S. Goods

​On August 22, 2025, Canadian Prime Minister Mark Carney announced the removal of retaliatory tariffs on U.S. goods covered under the Canada-U.S.-Mexico Agreement (CUSMA), effective September 1, 2025. This decision comes as part of ongoing efforts to address trade tensions with the United States and strengthen Canada’s economic position. ​

Details of the Announcement

• Tariff Removal: Canada will eliminate retaliatory tariffs on CUSMA-compliant U.S. goods. ​ However, tariffs on U.S. steel, aluminum, and autos will remain in place as negotiations continue. ​
• Trade Context: Despite the trade war and U.S. tariffs on Canadian goods like steel, aluminum, and lumber, 85% of trade between Canada and the U.S. remains tariff-free under CUSMA. ​ Canada’s average tariff rate on U.S. goods is 5.6%, significantly lower than the global average of 16%. ​
• Negotiations: Carney’s decision follows a conversation with U.S. President Donald Trump, during which both leaders agreed to intensify discussions on resolving trade issues in strategic sectors. ​

Rationale and Reaction

• Government’s Position: Carney emphasized the importance of preserving Canada’s trade advantage with the U.S. while addressing outstanding issues. ​ He also highlighted plans to strengthen the Canadian economy through expanded trade, infrastructure projects, and industrial strategies. ​
• Support: The Canadian Federation of Independent Business (CFIB) welcomed the move, stating it would ease pressure on small businesses impacted by the trade war. ​
• Criticism: Opposition leader Pierre Poilievre criticized the decision, accusing Carney of making concessions without securing reciprocal benefits. ​ Unifor, Canada’s largest private-sector union, also opposed the move, arguing it weakened Canada’s leverage. ​

Future Plans

• Nation-Building Projects: The Canadian government plans to announce the first in a series of infrastructure projects aimed at transforming the economy. ​
• CUSMA Review: Consultations with industry stakeholders will begin next month to prepare for the official review of CUSMA next year. ​
• Industrial Strategy: A comprehensive strategy addressing sectors affected by global tariffs will be unveiled in early September. ​

Conclusion The removal of retaliatory tariffs on CUSMA-compliant U.S. goods marks a significant step in Canada’s efforts to stabilize its trade relationship with the United States. ​ While the decision has drawn mixed reactions, the government remains focused on resolving trade disputes, supporting affected industries, and fostering economic growth.