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August 22, 2025
As Canada Signals Drop of Retaliatory Tariffs on USMCA-Compliant Goods, How Will US Retailers, Consumers, and Leadership Respond?
Canadian Prime Minister Mark Carney announced, on Aug. 22, that Canada would be removing retaliatory tariffs from goods compliant with the United States-Mexico-Canada Agreement (USMCA) by Sept. 1, marking something of a climbdown from an ongoing trade dispute between the neighboring nations.
According to the CBC, Carney noted that tariffs on steel, aluminum, and autos would be maintained despite the removal of the 25% retaliatory tariffs first instituted by his predecessor, Justin Trudeau, in March. The list of USMCA-compliant goods included in the retaliatory tariffs imposed by Canada was extensive, estimated at $155 billion by CNBC at that time. A lengthy listing of all goods subject to the 25% tariffs was outlined by the Government of Canada, and included meat, dairy, eggs, fruit, tea and coffee, spices, a variety of other grocery staples, sporting goods, alcoholic beverages, tobacco, home goods, health and beauty items, textiles, apparel, tools, housewares, and more.
Carney indicated that, in spite of the continuing trade dispute with the United States — including U.S. tariffs on aluminum, autos, copper, steel, lumber, and energy — the vast bulk (85%) of trade with the U.S. remained free of tariffs, a preferable outcome compared to the situation concerning other U.S. trade partner nations.
“As we work to address outstanding trade issues with the U.S., it is important we do everything we can to preserve this unique advantage for Canadian workers and their families,” Carney said.
“As we work intensively with the United States, our focus is squarely on the strategic sectors,” Carney also stated, per a more recent CNBC report.
White House Calls Canada’s Move ‘Long Overdue’
CNBC quoted a White House official as calling the move “long overdue” before pivoting to place some hope in continued negotiations between the two countries.
“We look forward to continuing our discussions with Canada on the Administration’s trade and national security concerns,” the official said.
The announcement follows a recent phone call between Carney and President Donald Trump, with the former’s office describing that conversation as “productive and wide-ranging.” Both Carney and Trump agreed, at that time, to meet again in the near future for further discussion.
It remains to be seen whether the cooling of tensions might lead to American consumers warming to Canadian imports — despite a concerted “Made in the U.S.A.” purchasing thrust spurred by the trade war — or if Canadian consumers will retreat from a soft boycott of American products, services, and travel.
The USMCA itself, negotiated by Trump and leadership from both Canada and Mexico and which went into effect July 1, 2020, is slated for review later this year.
Discussion Questions
How will U.S. retailers, consumers, and leadership figures respond to Canada’s apparent climbdown from many retaliatory tariffs?
Will Canada’s move spur the Trump administration to similarly roll back tariffs on Canadian imports?
Will a continued de-escalation of trade tensions lead to Canadian consumers softening the boycott against U.S. goods, services, and travel? Will some American consumers likewise again warm to Canadian imports as trade tensions ease?
Poll
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Mohamed Amer, PhD
CEO & Strategic Board Advisor, Strategy Doctor
Lisa Goller
B2B Content Strategist
Gary Sankary
Retail Industry Strategy, Esri
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This raises hopes for reduce tension and a trade agreement. The best thing would be for trade to be normalized with Canada. A strong partnership, trade and otherwise, is the best thing for both countries. Until normalization comes, friction will remain for everyone and retailers will continue to face higher costs.
I don’t read very much into this. The tit for tat which has emerged from Trump’s artificially created crisis have, so far, meant very little. Certainly it’s not a bad thing but Trump appears to WANT a crisis no matter what other countries do — and he wants to make big claims of success where there is none. Thus, many stories like this are simply ways other countries can give Trump something to claim “he did” without them giving up anything significant. While this is a Monday story, it seems TACO dominates.
Why would Canada dropping its tariffs incite a responee by US consumers ?? If there’s to be any response wouldn’t it either be U S exporters, or Canadian consumers ?
U.S. consumers may feel more willing to travel to Canada if there’s less controversy between our nations.
An interesting – and hopeful ! – angle; but I fear without some reciprocity, it’s not likely to get far. Indeed – admittedly, pessimistically – without such a response I feel we may end up even worse than before.
U.S. retail stakeholders will welcome Canada’s move to drop retaliatory tariffs, which affected many American CPG staples. By de-escalating trade tension, Mark Carney seems to acknowledge the bigger picture of our need for mutually-beneficial continental unity. This move comes after targeted sectors like orange juice and bourbon have been impacted, and ahead of next summer’s FIFA World Cup 26 hosting duties.
Carney’s pragmatic move to drop 25% retaliatory tariffs on $155 billion worth of goods is an immediate cost relief for US exporters and supply chain managers. These are tangible operational benefits irrespective of the political theater. The challenge is that consumers’ behavior lags policy, especially in this case, given the heated nationalistic fervor that ensued. A more immediate benefit will flow to the B2B side, where decisions are based more on cost structure than emotion. Bottom line, trade wars are expensive, inefficient, and ultimately unsustainable when consumers feel them in their wallets.
I was expecting this to happen. Carney wants to bring the U.S. to the table. Why? Carney understands he can give Trump something to talk about. (As Doub Garnett says, Trump “wants to make big claims of success where there is none.”) Both the EU and Japan have played Trump well.
Plus, it reduces costs for Canadian citizens.
As for U.S. retailers, nothing changes. What will be, will be for the U.S.? What we can count on is that in the end, it won’t be good for the U.S.
Consumers may be more inclined to purchase Canadian products as a result of the reduction of tariffs. Taking advantage of the cost advantage, retailers might expand their inventory to include a wider range of Canadian products. Leaders could highlight these changes in trade relations as a positive step towards strengthening economic relations with Canada.
Americans are not boycotting American goods. But Canadians are surely boycotting American goods with some emotional justification.
Maybe Canadians will buy a few more American goods without the tariffs, but I doubt it.
The question is about Canadians boycotting American products. Will Ontario Provincial liquor stores start carrying California wines and Kentucky bourbon again, and will Canadians return to Palm Springs and Florida in numbers again? Given the perceived attacks on Canadian sovereignty and the sense of betrayal by a former ally, not likely.
The irrational & undiplomatic whims of Trump/US gov’t remain, for 3+ more years at minimum. The intent to harm ally countries could flare up. Canadians have a right not to trust, and to move on to other trading partners.
If this was truly about trade and partnership and goodwill and all the things that used ot charactize the relationship between Canada and the US, then I would say that this would help with negotiations and foster an agreement. But these aren’t normal times, and these arbitrary policy decisions are more likely an aggressive move by a strong country on the economy and sovereignty of a smaller neighbor.
I don’t expect the Trump administration to do anything meaningful here to reduce tensions; their goal isn’t fair trade in this case.
And I do not think for a second that this move will include many Canadians to start buying American products or visiting the States anytime soon.
Too late for my company, which has been supplying Staples Canada on consignment. We ceased shipments after these counter-tariffs were originally implemented, as we’d have to pay the 25% immediately as our inventory crossed the border but not realize a sale until months later (and Staples refused to accept a price increase to offset our higher cost). This caused us to miss stocking up for the Back-to-School season – and contributed to our decision to go out of business this October.