Canada abandons tariff retaliation strategy

Hold onto your maple syrup, folks—Canada just waved the white flag on trade spats with the United States.

Prime Minister Mark Carney announced Friday that Canada will scrap retaliatory tariffs on goods under the United States-Mexico-Canada Agreement (USMCA), aligning with U.S. exemptions and aiming to smooth over tensions before the pact’s 2026 review.

This policy pivot comes after a Thursday phone call between Carney and President Donald J. Trump, setting the stage for a fresh approach. A cabinet meeting on Friday sealed the deal before the public reveal. It’s a stark contrast to the tit-for-tat tariff days under former Prime Minister Justin Trudeau.

Resetting Trade Talks with Washington

Canada’s decision to match U.S. exemptions under the 2020 USMCA pact signals a desire to hit the reset button on trade discussions. With over 85% of Canada-U.S. trade already tariff-free, and Canadian goods enjoying some of the lowest rates thanks to USMCA commitments, this move seems like a pragmatic play.

Carney himself touted the arrangement, saying, “Canada currently has the best trade deal.” But let’s be real—best deal or not, it’s still a far cry from the days when trade flowed without the shadow of sector-specific duties looming overhead.

Unlike Trudeau, who slapped counter-tariffs on U.S. goods when new duties hit, Carney’s administration is stepping back from that confrontational stance. The Trump administration had already exempted USMCA-covered goods before Trudeau’s retaliatory measures kicked in, so Ottawa is now just catching up to the program.

Steel and Aluminum Tensions Persist

Yet, not everything is sunshine and roses in this trade relationship. Frictions remain, especially with U.S. Section 232 national-security tariffs, including a hefty 50% levy on Canadian steel and aluminum imports despite the USMCA framework. It’s a sore spot that no amount of tariff alignment can fully soothe.

Carney acknowledged the lingering issues, stating, “Canada will retain our tariffs on steel, aluminum, and autos.” Fair enough, but holding onto those specific tariffs while dropping others feels like fighting a bear with one hand tied behind your back.

Labor leaders aren’t thrilled with this capitulation either. Unifor President Lana Payne took to social media, blasting, “Trump’s attacks on auto, steel, aluminum, and forestry sectors are hurting Canadian workers.” She’s got a point—Canadian jobs are on the line while Ottawa plays nice.

Labor Leaders Cry Foul Loudly

Payne didn’t stop there, adding, “Walking back counter-tariffs isn’t an olive branch.” She’s calling this move a green light for more U.S. pressure, and it’s hard to argue when Canadian workers are feeling the pinch from targeted American duties.

Let’s not forget the backstory of tech taxes, adding fuel to the fire. Carney recently shelved a plan to tax U.S. tech giants after Trump called it “a direct and blatant attack” on America, even pausing trade talks over the issue. Turns out, poking the bear on tech policy comes with a price tag.

Now, with Canada formally aligning its tariff exemptions to match U.S. treatment under USMCA, the hope is for calmer waters ahead. Canadian and Mexican companies still enjoy preferential treatment under the agreement, which is a small win for businesses navigating these choppy trade seas.

Looking Ahead to 2026 Review

But let’s not kid ourselves—this isn’t a full resolution. The 2026 USMCA review looms large, and sector-specific disputes like steel and aluminum tariffs aren’t going away with a simple policy tweak. Canada’s playing the long game, hoping this goodwill gesture pays off down the road.

From a conservative lens, it’s refreshing to see a leader step back from the endless cycle of retaliatory tariffs that often hurt consumers more than they protect industries. Yet, one can’t help but wonder if Canada’s dropping its guard too soon while American duties still bite hard into key sectors. A balance must be struck, and Carney’s got a tightrope to walk.

At the end of the day, trade wars are a messy business, and Canada’s latest move might just be a calculated risk to de-escalate tensions. Whether it’s a masterstroke or a misstep, only time will tell—especially with Washington’s unyielding stance on national security tariffs. For now, Canadian workers and businesses wait to see if this olive branch bears fruit, or if it’s just another leaf in the wind.