Canada’s Prime Minister Mark Carney just pulled a surprising U-turn on trade policy, scrapping some retaliatory tariffs on U.S. goods to keep the conversation going with President Donald Trump.
According to Politico, in a nutshell, Canada’s decision to drop select tariffs compliant with the United States-Mexico-Canada Agreement (USMCA) marks a pivot from Carney’s hardline stance, aiming to cool tensions and bolster talks with the White House.
Let’s rewind a bit to earlier this year, when Trump slapped tariffs on Canadian products, energy, and critical minerals, prompting Canada to hit back with a hefty 25 percent tariff on USMCA-compliant U.S. goods. That was Carney’s “elbows up” moment. But now, it seems the maple leaf is waving a white flag on some of those levies, as announced on Friday.
Just days before this tariff rollback, the White House upped the ante, expanding a 50 percent tariff on steel and aluminum to cover 407 new products. Canada’s steel industry, already reeling from production drops, is pushing Ottawa to match that 50 percent rate on U.S. imports, but Carney is holding steady at 25 percent for now on steel, aluminum, and autos.
Back in June, Canada also nixed its digital services tax under pressure from Washington, another olive branch to smooth over trade disputes. Turns out, bending a little might be Carney’s new strategy to avoid a full-blown trade war. One has to wonder if this is pragmatism or just playing nice for the cameras.
Fast forward to three weeks ago, when Ottawa and Washington missed Trump’s self-imposed August 1 deadline for a deal. On the eve of that deadline, Trump threw a curveball, pointing to Canada’s recognition of Palestinian statehood as a potential snag in talks. Carney, undeterred, plans to stand firm on that issue at next month’s United Nations General Assembly.
A day before the tariff announcement, Carney and Trump had what was described as a “productive and wide-ranging” phone call, covering trade and a potential new economic and security partnership. Trump called it a “nice” gesture, adding, “I like Carney a lot.” Well, isn’t that a cozy little bromance brewing over trade spats?
But let’s not get too warm and fuzzy—Trump’s justification for his tariffs includes claims about fentanyl crossing Canada’s border into the U.S., though the amount is less than 0.1 percent of total seizures by American authorities. Seems like a small stick to swing for such a big fight. Still, it’s a reminder that every issue, no matter how minor, can become a bargaining chip.
Meanwhile, Canadian negotiators are still gunning for a deal to lift heightened tariffs on goods outside the USMCA, a trade pact signed during Trump’s first term and up for renewal next year. Carney’s itching to kick off those talks next month, projecting a timeline of 6 to 18 months. That’s a long game for a deal that’s already overdue.
These negotiations aren’t being hashed out by junior staffers—high-level players like U.S. Commerce Secretary Howard Lutnick and Canada-U.S. Trade Minister Dominic LeBlanc are at the table. It’s a sign that both sides know the stakes are sky-high. After all, with the U.S. tariff rate on Canadian goods at just 5.6 percent—the lowest among America’s trading partners—there’s a lot of goodwill to preserve.
Carney himself boasted, “We have the best deal of anyone in the world right now.” That’s a bold claim when your steel industry is begging for tougher countermeasures. Confidence is great, but results matter more, Mr. Prime Minister.
He also stated, “Today, the Government of Canada is harmonizing its tariffs with the U.S.” Harmonizing? Sounds like a polite way of saying, “We’re backing down to keep the peace.”
From a conservative lens, it’s refreshing to see Carney prioritize economic stability over a prolonged tit-for-tat with Trump, especially when Canada’s economy can’t afford more bruises. Yet, one can’t help but raise an eyebrow at concessions like the digital tax rollback—where’s the line between compromise and capitulation?
Trump’s own words, “We want to be very good to Canada,” suggest there’s room for a deal, but only if both sides keep their cards close. Let’s hope Carney’s newfound diplomacy doesn’t mean abandoning Canada’s interests altogether.
Turns out, playing nice might just be the smartest tariff of all.
