‘Another capitulation’: Canada caves to Trump, dropping retaliatory tariffs

Months after scrapping its digital service tax in the face of threats from President Donald Trump, Canada’s liberal government has caved once again.

This time, Canadian Prime Minister Mark Carney — who put on quite the show about defying the U.S. while campaigning for office earlier this year — announced on Friday that Canada is dropping retaliatory tariffs on a number of American products in hopes of improving both relations with the White House and outcomes in future trade talks with the United States.

Canada was one of the only countries in the world that retaliated against Trump’s tariffs, imposing three rounds of retaliatory measures, reported the Globe and Mail. These measures included a 25% tariff on roughly $21 billion of American goods including orange juice and motorcycles and a 25% tariff on American cars.

Citing Trump’s tariffs under the International Emergency Economic Powers Act, “substantial trade actions” on the Canadian lumber industry, Trump’s reciprocal and sectoral tariffs, and recent deals struck between the U.S. and other countries, Carney noted that “the breadth and depth of the changes in U.S. trade policy have become more fully apparent.”

“Under the new U.S. approach, countries must now ‘buy access to the world’s largest economy’ through tariffs, investments, unilateral trade liberalization, and policy changes in their home markets,” said the prime minister.

Carney attempted to put a positive spin on the situation, stating that as a result of America’s reaffirmation that Canadian exports to the U.S. that are compliant with the Canada-United States-Mexico Agreement won’t be subject to IEEPA tariffs, the “actual U.S. average tariff rate on Canadian goods is 5.6% and remains the lowest among all its trading partners, and more than 85% of Canada-U.S. trade is now tariff-free.”

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STEFAN ROUSSEAU/POOL/AFP via Getty Images

In the interest of preserving what Carney framed as “the best trade deal with the United States,” the prime minister said that effective Sept. 1, Canada will remove all of its tariffs on American good specifically covered under the CUSMA.

Canada, like the U.S., will, however, retain tariffs on steel, aluminum, and automobiles.

‘He is showing extraordinary weakness.’

“The United States is the world’s largest, most dynamic economy, and Canada is one of its most important commercial partners,” said Carney.

“Canada is the second-largest foreign investor in the U.S., and many of our companies are essential to the complex supply chains that drive American competitiveness,” continued the prime minister. “Canada is embarking on a transformation of our military and security capabilities to defend Canadians — investments that will create multiple opportunities for new defense and security partnerships.”

Trump told reporters in the Oval Office on Friday that he had a “very good call with Prime Minister Carney of Canada yesterday morning,” that “we want to be very good to Canada,” and that the removal of the tariffs was “nice.”

Canadian Conservative Party Leader Pierre Poilievre mocked Carney, calling the tariff removal “another capitulation and climbdown by Mark Carney,” reported Canadian state media.

“Today, he removed even almost all the tariffs on the United States and got none lifted for Canada,” said Poilievre. “He is showing extraordinary weakness.”

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