Canada will match U.S. exemptions to punishing tariffs, says Canadian official

Canada is dropping retaliatory tariffs to match U.S. tariff exemptions for items coated beneath the United States-Mexico-Canada commerce pact, Prime Minister Mark Carney introduced on Friday (August 22, 2025).

Mr., Carney stated Canada will embrace the carve-out that the U.S. has on Canadian items beneath the 2020 free commerce deal that shields the overwhelming majority of products from the punishing duties.

“Canada at present has one of the best commerce take care of the United States. And whereas it’s completely different from what we had earlier than, it’s nonetheless higher than that of every other nation,” Mr. Carney stated.

The transfer is designed to reset commerce talks between the 2 international locations. The USMCA is up for evaluation in 2026, and Carney known as the commerce pact a novel benefit for Canada at a time when it’s clear that the U.S. is charging for entry to its market.

Carney stated the dedication of the U.S. to the core of USMCA means the U.S. common tariff charge on Canadian items stays one in all its lowest, and that over 85% of Canada-U.S. commerce continues to be freed from tariffs.

Canadian and Mexican firms can declare preferential remedy beneath the USMCA.

Former Prime Minister Justin Trudeau initially placed on retaliatory tariffs in response to U.S. tariffs, however earlier than the U.S. tariffs have been utilized the Trump administration exempted items coated by the free commerce deal.

Most imports from Canada and Mexico are nonetheless protected by the USMCA, however U.S. Commerce Secretary Howard Lutnick has stated, “I believe the president is completely going to renegotiate USMCA.”

Preserving the free commerce pact shall be important for Canada and Mexico. More than 75% of Canada’s exports go to the U.S. whereas greater than 80% of Mexico’s exports go there.

Mr. Trump has introduced some sector specific-tariffs that do apply for Canada regardless of the USMCA — referred to as 232 tariffs — that are having an influence on the Canadian financial system. There is a 50% tariff on metal and aluminum imports, for instance.

“Canada and the United States have reestablished free commerce for the overwhelming majority of our items. Canada will retain our tariffs on metal, aluminum and autos as we work intensivily to resolve the problems there,” Mr. Carney stated.