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.