Canada on Friday rolled back a wide range of retaliatory tariffs it had imposed on U.S. goods, signaling a significant step toward easing tensions in a trade conflict that has defined relations between the two countries for much of the year.
Prime Minister Mark Carney announced that while tariffs on sensitive sectors such as U.S. autos, steel, and aluminum will remain in place, many of the broader duties Canada slapped on American products in March will be removed beginning September 1.
The move comes after months of back-and-forth tariff exchanges that began when Washington announced 25% duties on steel and aluminum, prompting Canada to respond with counter-tariffs of equal weight. At the time, Ottawa targeted a long list of U.S. goods worth CA$30 billion (US$21.7 billion), ranging from industrial products to consumer staples, under the government of then-Prime Minister Justin Trudeau. Canada’s tariffs, framed as a defense of national interest and an assertion of sovereignty under the North American trade deal framework, were among the most aggressive countermeasures by a U.S. ally.
Register for Tekedia Mini-MBA edition 19 (Feb 9 – May 2, 2026): big discounts for early bird.
Tekedia AI in Business Masterclass opens registrations.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Register for Tekedia AI Lab: From Technical Design to Deployment (next edition begins Jan 24 2026).
Carney, who took office earlier this year, struck a different tone in announcing the rollback. “As we work intensively with the United States, our focus is squarely on the strategic sectors,” he said during a press conference, underscoring that Ottawa is carefully narrowing its measures while keeping leverage in areas most vital to both economies.
The White House welcomed the change. A senior U.S. official described Canada’s move as “long overdue” and emphasized Washington’s interest in resolving outstanding disputes.
“We look forward to continuing our discussions with Canada on the Administration’s trade and national security concerns,” the official told NBC News.
Friday’s announcement followed a phone call between Carney and President Donald Trump, the first direct conversation between the two leaders since trade talks collapsed ahead of the August 1 tariff deadline. Carney’s office described the discussion as “productive and wide-ranging,” with both sides agreeing to reconvene in the near future.
The dispute has its roots in long-standing U.S. concerns over steel dumping, global overcapacity, and cross-border smuggling of contraband drugs, particularly fentanyl. Trump raised tariffs on Canadian goods to 35% in July, citing both trade fairness and Canada’s alleged unwillingness to cooperate on security matters. He pointed to the rise of fentanyl entering the United States through the northern border, where U.S. Customs and Border Protection reported seizing 43 pounds of the drug in 2024 and an additional 58 pounds so far this year.
For Canada, the tariffs have carried heavy political and economic weight. Trudeau’s government, which first imposed countermeasures, framed them as necessary to protect Canadian industries and to demonstrate Ottawa’s resolve in standing up to Washington. The measures hit iconic American exports and were designed to both shield domestic manufacturers and apply political pressure on U.S. lawmakers.
Carney, however, has taken a more pragmatic approach, seeking to balance firmness with negotiation as the U.S.-Mexico-Canada Agreement (USMCA)—Trump’s signature renegotiation of NAFTA—is set for review later this year. The rollback of tariffs suggests Ottawa is recalibrating its strategy, preparing to enter those talks on a less confrontational footing.
Carney has publicly emphasized that Canada remains committed to collaboration with the U.S., even while reserving the right to defend its most sensitive industries. When Trump raised tariffs in July, Carney responded on X, declaring Canada’s commitment to “working alongside the U.S. to come to a deal.”
The easing of tariffs, while partial, marks a notable shift in a conflict that escalated quickly and drew concern from businesses on both sides of the border. With the USMCA review looming, both Washington and Ottawa appear to be moving cautiously toward a compromise, though steel, aluminum, and autos remain flashpoints that could yet reignite tensions.