OTTAWA (Reuters) -Canada will remove many retaliatory import tariffs on U.S. goods and intensify contacts with the United States on striking a new trade and security relationship, Prime Minister Mark Carney said on Friday.
Canadian tariffs on U.S. autos, steel and aluminum will remain for now, he told a press conference in Ottawa.
Carney noted that the United States had recently made clear that it would not impose tariffs on Canadian goods that were compliant with the three-nation U.S.-Mexico-Canada free trade agreement, something he called a positive development.
“In this context and consistent with Canada’s commitment to USMCA, I am announcing today that the Canadian government will now match the United States by removing all of Canada’s tariffs on U.S. goods specifically covered under USMCA,” he said.
“Canada and the U.S. have now re-established free trade for the vast majority of our goods,” he added, reiterating that compared with its trading partners, Canadian exports were still subject overall to a low level of U.S. tariffs.
The news helped the Canadian dollar extend its gains and by 12:40 pm. it was up 0.5% at C$1.3837 to the U.S. dollar, or 72.27 U.S. cents.
Canada has been holding talks with the United States on a new economic and security relationship for months but the two sides are not close to a deal.
Canada and China are the only nations to strike back at the United States with counter tariffs, much to the irritation of the U.S. administration.
“We welcome this move by Canada, which is long overdue. We look forward to continuing our discussions with Canada on the Administration’s trade and national security concerns,” a White House official said.
Carney spoke to Donald Trump on Thursday. Asked whether the U.S. president had told him that lifting the tariffs would kick start the talks, Carney responded “Yes.”
Carney won an April election on the back of a promise to stand up to Trump’s tariffs but since then has gradually taken a softer tone.
In late June, Carney scrapped a proposed digital services tax that U.S. companies strongly disliked and in July dropped talk of further sanctions if the two sides could not reach a deal by August 1.
Carney, using an ice hockey analogy, said the time had come for a more moderate approach rather than continuing to take an aggressive stance.
“Let’s be clear, we have the best deal of anyone in the world right now,” he said. “Nobody has a deal with the United States that they used to have.”
The news could be a political challenge for Carney, whose ruling Liberals only have a minority of seats in the House of Commons elected chamber and rely on opposition parties to survive votes of confidence.
The leader of the Conservatives, the largest opposition party, this week accused Carney of taking too soft an approach with the United States.
Carney’s predecessor as prime minister, Justin Trudeau, imposed 25% tariffs on C$30 billion ($21 billion) in goods imported annually from the U.S. on March 6 in response to Trump’s initial duties.
The C$30 billion was part of an overall retaliation plan to target C$155 billion worth of imported goods from the U.S., though the remaining C$125 billion has been delayed.
(Editing by Chizu Nomiyama, Toby Chopra, Hugh Lawson and Alistair Bell)
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