Canada removes billions in tariffs on U.S. imports after Trump-Carney call

Ottawa dials back retaliatory tariffs on consumer goods, leaving core fights over metals and autos in place ahead of the 2026 USMCA review

By Shannon Carroll3 min readUpdated August 22, 2025

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Canada removes billions in tariffs on U.S. imports after Trump-Carney call

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Canada just lowered its guard — but only where it doesn’t hurt. On Friday, a source familiar with the matter told Reuters that Ottawa plans to scrap most of the 25% retaliatory tariffs it had slapped on U.S. imports, an apparent gesture of goodwill to President Donald Trump. Orange juice, clothing, appliances, and even motorcycles will come off the hit list beginning Sept. 1. The heavyweights — steel, aluminum, and autos — remain untouched. In other words, Canada is offering an olive branch that still has some thorns attached.

Prime Minister Mark Carney cast the move as a simple matter of “aligning” with the U.S. exemptions laid out under the United States-Mexico-Canada Agreement (USMCA). And while that language makes it sound like housekeeping, the political calculus runs deeper. The rollback follows a phone call earlier this week between Carney and Trump that has been described as “productive.” In practice, Canada is testing a small concession in exchange for a quieter trade front — and perhaps a more cooperative White House — as the clock ticks toward the 2026 renegotiation of the continental trade pact.

Both leaders are set to hold press conferences, sparking speculation that the two countries could be announcing a tariff pause or trade deal.

The tariffs being scrapped were always more symbolic than strategic. Taxing orange juice might sting Floridian growers, but it never threatened U.S. industrial capacity. By contrast, the duties Canada is keeping in place — Carney has pointed to the U.S.'s still-active “Section 232” levies that remain a flashpoint in cross-border trade as a reason why — go right to the heart of Trump’s economic playbook and the symbolic core of his protectionist platform. Steel and aluminum tariffs remain the most politically charged, and keeping them allows Ottawa to hold onto its most useful bargaining chips. The same logic applies to autos, where supply chains are tightly wound across the Detroit-Ontario corridor. Those sectors are where the pain is real — and where Ottawa isn’t budging.

That nuance, however, doesn’t make for easy domestic politics. Carney governs with a precarious minority, and his critics are already accusing him of folding to Trump for nothing in return. The Conservative opposition has painted the rollback as weakness, while business groups have cheered the relief on consumer goods. For households still feeling the pinch from higher interest rates, the removal of tariffs on everyday products may register as a modest win. But critics argue that if Carney was going to yield, he should have held out for a concrete concession from Trump — something beyond a polite phone call and a passing headline.

For Trump, the gesture offers validation. He has spent months portraying Canada as a reluctant partner in U.S. industrial policy. A rollback on tariffs allows him to claim victory without having to make any immediate concessions of his own. Still, the still-in-place metal and auto tariffs mean the dispute between the two neighbors isn’t resolved, only softened.

The stakes are high for both economies. Canada’s retaliatory tariffs, introduced earlier this year, gave Ottawa some leverage in talks with Washington but also risked higher prices for consumers and snarled supply chains in industries tightly linked across the border. Inflation has moderated from its peaks but remains above the Bank of Canada’s comfort zone, leaving households sensitive to cost shifts. The Canadian dollar, meanwhile, ticked higher on the tariff rollback news — a sign markets see relief, even if limited. For Carney’s government, the calculation is straightforward: Pare back on politically noisy tariffs to ease pressure at home while testing whether Trump is willing to reciprocate before the USMCA review.

Yet despite the announcement, the structural disputes haven’t moved an inch. Trump can claim victory — he forced Canada to blink — while still wielding the same levers of pressure he’s had all along. And Carney, for all his talk of pragmatism, must now defend why his government chose to trim tariffs that were more nuisance than necessity — and why it left the real battles untouched. For now, both governments can spin the moment as progress. The reality is more familiar: There’s still more to come.

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