On August 22, 2025, Canadian Prime Minister Mark Carney announced that Canada will remove retaliatory tariffs on a wide range of U.S. products that comply with the United States-Mexico-Canada Agreement (USMCA), effective September 1, 2025. This decision follows a period of heightened trade tensions, with Canada having imposed 25% counter-tariffs in March on various American goods, including alcohol, clothing, and shoes, in response to U.S. tariffs on Canadian steel, aluminum, and other products. The move is seen as a gesture to de-escalate the ongoing trade war and foster renewed negotiations with the U.S., particularly after a productive call between Carney and U.S. President Donald Trump on August 21, 2025. The White House welcomed the decision, calling it “long overdue,” and expressed interest in continuing discussions to address trade and national security concerns.

While Canada is lifting tariffs on USMCA-compliant goods, it will maintain 25% tariffs on U.S. autos, steel, and aluminum for the time being, as these sectors remain focal points in ongoing trade negotiations. Carney emphasized that 85% of Canada’s trade with the U.S. remains tariff-free, positioning Canada favorably compared to other U.S. trading partners, with an average U.S. tariff rate of 5.6% on Canadian goods. The decision to remove tariffs is partly strategic, aiming to protect Canadian exporters who have faced challenges as U.S. buyers pivot to “Buy American” alternatives, impacting Canadian food affordability and export markets. Critics, as seen in posts on X, argue that Canada’s earlier retaliatory tariffs were politically motivated and economically damaging, with some suggesting they failed to account for the U.S.’s diversified supply chains, which lessen the impact of Canadian countermeasures.

The tariff removal is a step toward re-establishing free trade for the majority of goods under the USMCA, with Carney noting it aligns with U.S. exemptions for USMCA-compliant Canadian goods. This development comes ahead of a scheduled USMCA review in 2026, for which Canada is launching consultations next month to prepare. The move has boosted the Canadian dollar and is viewed as an effort to stabilize bilateral trade relations amid concerns over issues like fentanyl trafficking, which the U.S. has cited as a factor in its tariff policies. However, some X posts express skepticism, with users like @Lanampayne arguing that U.S. actions, such as violating trade agreements, provoked Canada’s earlier tariffs. As both nations navigate this complex trade landscape, the tariff rollback signals a pragmatic approach to resolving disputes while maintaining pressure on key sectors.