Canada will drop retaliatory tariffs to match U.S. exemptions for goods covered by the United States-Mexico-Canada Agreement and will adopt the U.S. carve-out that shields most goods. The change aims to reset trade talks and preserve the advantages of the USMCA ahead of its 2026 review. The U.S. commitment to the pact keeps average U.S. tariff rates on Canadian goods among the lowest and leaves over 85% of Canada–U.S. trade tariff-free. Canadian and Mexican firms retain preferential treatment under the agreement, even as sector-specific 232 tariffs continue to affect some Canadian industries.
TORONTO Canada is dropping retaliatory tariffs to match U.S. tariff exemptions for goods covered under the United States-Mexico-Canada trade pact, Prime Minister Mark Carney announced Friday. Carney said Canada will include the carve-out that the U.S. has on Canadian goods under the 2020 free trade deal that shields the vast majority of goods from the punishing duties. "Canada currently has the best trade deal with the United States."
The move is designed to reset trade talks between the two countries. The USMCA is up for review in 2026, and Carney called the trade pact a unique advantage for Canada at a time when it is clear that the U.S. is charging for access to its market. Carney said the commitment of the U.S. to the core of USMCA means the U.S. average tariff rate on Canadian goods remains one of its lowest,
Canadian and Mexican companies can claim preferential treatment under the USMCA. Former Prime Minister Justin Trudeau initially put on retaliatory tariffs in response to U.S. tariffs, but before the U.S. tariffs were applied the Trump administration exempted goods covered by the free trade deal. Most imports from Canada and Mexico are still protected by the USMCA, but U.S. Commerce Secretary Howard Lutnick has said, "I think the president is absolutely going to renegotiate USMCA."
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