Canada is shifting its approach toward U.S. tariffs in a move that’s catching a lot of attention.
The Canadian government has announced that it will lift retaliatory tariffs on certain U.S. consumer products, which were originally set at 25%. This means many American-made goods could enter Canada without that added cost—so long as they meet the requirements of the U.S.-Mexico-Canada Agreement (USMCA).
But it’s not a complete rollback. Canada will continue applying steep tariffs on U.S. steel, aluminum, and vehicles, industries where President Trump has already imposed restrictions of his own.
Prime Minister Mark Carney is expected to formally announce the policy after consulting with his cabinet. The timing is significant because the USMCA is up for review in the coming months, and this move is widely seen as part of Canada’s strategy to show flexibility while also protecting its key industries.
This represents a major shift compared to Canada’s earlier stance. Under former Prime Minister Justin Trudeau, Canada responded aggressively to Trump’s tariffs, hitting back with billions in countermeasures on goods like wine, orange juice, motorcycles, and tools. Carney, while initially promising to be tough on Washington, has since taken a more cautious position.
In fact, his government has already allowed exemptions for certain imports and even created relief options for automakers like General Motors and Stellantis—provided they keep production and investment inside Canada.
Interestingly, while counter-tariffs were designed to pressure the U.S., they haven’t created major inflationary issues at home. Statistics Canada reported a consumer price index increase of just 1.7% in July, which remains below the Bank of Canada’s 2% target.
All of this follows a phone call between Carney and Trump—their first public conversation in weeks—raising questions about whether this softer approach could signal an attempt to ease tensions before trade negotiations heat up again.
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