A wide array of U.S. goods, from motorcycles to shoes, will soon again be tariff-free.
What happened: Ottawa will drop its 25% retaliatory tariffs on many U.S. imports as long as they are shipped in compliance with the Canada-U.S.-Mexico Agreement (CUSMA), effective September 1. This matches a U.S. decision to grant exemptions for CUSMA-compliant imports.
- The tariffs were adopted in March, when Justin Trudeau was still in office, as a clapback to 25% U.S. tariffs on Canadian goods and 10% tariffs on Canadian energy.
- The feds are maintaining separate 25% duties on steel, aluminum, and automobiles.
Why it matters: The move cements a shift in PM Mark Carney’s trade war tactics from playing hardball to playing nice, after the former strategy seemingly hit a wall. It could be the right call, as President Donald Trump has repeatedly dismissed trade progress with Canada and, at the start of August, increased tariffs on Canadian imports to 35% from 25%.
- Carney’s strategy shift was first signalled in June when the feds dropped the long-in-the-works digital services tax a day before it was to come into effect.
Zoom out: The move will also lighten the load of Canadians purchasing the many U.S. products that have gotten pricier. For example, if you crave only Florida orange juice, the price for a 2.63-litre jug of Tropicana might soon drop from its shocking $13.99 price tag.
Yes, but: The retreat will surely receive criticism. Be it from Carney voters who want to see him uphold his campaign pledge to inflict “maximum pain” on the U.S., or from leaders like Ontario Premier Doug Ford who swear that force is the best way to deal with Trump.—QH