OTTAWA — Canada is dropping its countertariffs on the American goods that are covered by the free-trade agreement between the two countries, amid the ongoing trade war with the United States, Prime Minister Mark Carney said Friday.
Carney made the announcement during a news conference Friday, following a virtual meeting of his cabinet, and the day after a discussion with U.S. President Donald Trump.
Canada’s countertariffs on U.S. steel, aluminum, and autos are not changing, Carney said, adding the government’s “focus is squarely on these strategic sectors” going forward.
When asked whether he received assurances from Trump that scrapping some countermeasures will kickstart negotiations on a new trade and security deal, Carney said: “yes.”
Carney said that following his conversation yesterday with Trump, Canada and the U.S. agreed to “intensify” discussions to address trade challenges and “to seize major immediate opportunities, both in trade, investment and security.”
Carney won’t rule out future increases to steel and aluminum tariffs
Canada and the U.S. have been in a protracted trade war since February, when Trump imposed sweeping tariffs on Canadian goods, claiming they were related to border security. In the months since, he’s stacked additional sectoral tariffs on steel and aluminum, copper and autos.
Products that are covered by the Canada-U.S.-Mexico free trade agreement — known as CUSMA — are exempt from the initial slate of border-related levies.
Speaking to reporters on Friday, Carney insisted the move to drop some countertariffs is meant to “match” U.S. levies, by implementing a carve-out for goods covered by CUSMA. But, while the American administration has imposed 50 per cent tariffs on steel and aluminum, Canada’s countertariffs on those industries will remain at 25 per cent.
When asked whether Canada will increase its tariffs on steel and aluminum to match those of the U.S., Carney said not at the moment. But, when pressed on whether it’s something he’d consider in the future, the prime minister said: “we’ll look at everything.”
“We look at our industry both in terms of how we support their retooling, their investment in the industries, liquidity for today, helping their workers, buying Canadian, diversifying markets, but of course, trade policy, including with the United States, is part of that,” Carney said. “But we’re engaged in discussions with the United States about exactly those sectors.”
When asked what Canada could gain from making concessions to the U.S. — for example by scrapping the controversial digital services tax, and now by eliminating some countertariffs — Carney again insisted that aside from certain sectors, the move is meant to “match” the Americans.
“That’s the first point. Second is that the president and I had a long conversation yesterday, and we see the opportunity to build on where our relationship already is,” Carney added. “There’s a host of areas for investment in both our economies, host of areas on the security side that we can build on, and we intend to advance those discussions as rapidly as possible.”
CUSMA, for its part, is up for review next year. Carney said the federal government is beginning preparations for a renegotiation of that deal.
The government has also implemented measures to support the industries most affected by the trade dispute, and has been working to diversify its export markets to help insulate the Canadian economy from an over-reliance on the United States.
Several provinces, meanwhile, have removed U.S. alcohol from liquor store shelves, and Canadians en masse have reduced travel south of the border. Trump and his team have criticized those actions, according to U.S. ambassador to Canada Pete Hoekstra, calling the country “nasty” to deal with.
Trump: ‘I like Carney a lot’
In a statement to CTV News on Friday, a White House official said the U.S. welcomes Canada’s decision to remove tariffs on CUSMA-compliant goods, calling it “long overdue.”
The official added they look forward to “continuing our discussions with Canada on the administration’s trade and national security concerns.”
Speaking to reporters in the Oval Office Friday, Trump categorized his discussion with Carney the day before as “a very good call,” and saying he thought it was “nice” that Canada is dropping its counterlevies.
“I like him a lot,” Trump said in reference to Carney, adding he thinks he’s “a good person,” while accusing Canada and Mexico of taking “a lot of (U.S.) business over the years.”
“It’s basically all coming back into the United States now,” he added. “We’re hot as a pistol. It’s coming back in because of tariffs and incentives we give.”
Poilievre criticizes Carney for capitulation
In an interview with CTV News on Friday, Canadian Steel Producers Association President and CEO Catherine Cobden said the federal government has “taken an ‘elbows down’ approach on steel.”
“The facts are, we are not matching the tariff level by any stretch of anyone’s imagination, on what the U.S. is doing to us on steel,” Cobden said. “We are far, far away from that.”
Conservative Leader Pierre Poilievre, meanwhile, criticized Carney for the number of concessions he made to Trump, accusing him of capitulating to the U.S. president and showing “weakness” on the world stage.
“His elbows have mysteriously gone missing,” Poilievre told reporters on Parliament Hill Friday, in reference to Carney’s campaign promise that he’d be the best person to deal with Trump, and his pledges to negotiate with Trump with elbows up.
“It was the promise on which he ran his entire election campaign, and now he’s abandoning it,” Poilievre also said. “So, either he admits that he was wrong all along, or that he knowingly spread falsehoods to get elected.”
When asked whether he wants to see Canada increase its tariffs on American steel and aluminum to the rate of the U.S. levies, Poilievre wouldn’t directly say.
“My preference would be to see the Americans lower their tariffs so that we can reinstate free trade,” he said. “But one tariff that I will be cutting for sure, that I will push the prime minister to cut for sure, … is the industrial carbon tax.”
Poilievre said he’s ready to work with Carney to tackle the cost-of-living crisis, and that all the parties need to “get to work” when the House comes back in the fall.
With files from CTV News’ Brennan MacDonald, Stephanie Ha, and Noah Wachter
