Canadian Prime Minister Mark Carney announced that Canada will lift all tariffs on U.S. goods covered under the USMCA agreement, aligning its policy with Washington. While tariffs on U.S. autos, steel, and aluminum will remain in place for now, Carney said the move restores free trade on the majority of bilateral goods.
The decision follows assurances from Washington that it would not impose duties on Canadian products compliant with USMCA rules. Carney called this a “positive development” and emphasized that Canadian exports still face relatively low levels of U.S. tariffs compared with other trading partners.
The news boosted the Canadian dollar, which strengthened 0.5% to C$1.3837 against the U.S. dollar by mid-day Friday.
Canada and the U.S. have been in prolonged talks over a new economic and security framework, though a breakthrough deal remains distant. Notably, Canada and China have been the only countries to retaliate against Washington with counter-tariffs — a policy that drew irritation from the Trump administration.
A White House official welcomed Canada’s latest decision, calling it “long overdue,” while Carney confirmed that Trump personally linked the tariff removal to progress in talks.
Carney, who campaigned on a tougher stance against U.S. tariffs, has recently softened his approach. He abandoned a proposed digital services tax in June and dropped threats of new sanctions in July, signaling a shift to moderation. Using a hockey metaphor, he said it was time to “play with more balance rather than aggression.”
The move, however, may carry political risks. Carney’s minority Liberal government depends on opposition parties to survive confidence votes, and Conservative leader Pierre Poilievre has accused him of being too lenient with Washington.
Traders also expect the government to hint at fresh interest rate cuts next month, adding to the economic backdrop of the trade talks.
Carney stressed that Canada still holds a uniquely favorable trade arrangement:
“Let’s be clear, we have the best deal of anyone in the world right now. Nobody has a deal with the United States that they used to have.”
