Canada Removes Tariffs on U.S. Goods, Reaffirming Free Trade and Strategic Growth

The Canadian government has announced a major step in strengthening its trade relationship with the United States, while also preparing to protect Canadian jobs, boost competitiveness, and secure the country’s position as a leading economy in the G7.

Throughout ongoing negotiations with the U.S., Canada has remained focused on three key objectives: protecting Canadian workers and their families, reinforcing the competitiveness of Canadian businesses, and building the strongest economy in the G7. These discussions come as the United States reshapes its trade policies globally, with aims that include raising tariffs, protecting strategic industries, and encouraging foreign investment.

Over the past two years, the U.S. has taken significant trade actions, including imposing tariffs under the International Emergency Economic Powers Act (IEEPA) on Canada and Mexico due to border and fentanyl concerns. These have been followed by sector-specific tariffs on steel, aluminum, autos, copper, and Canadian lumber, as well as broad reciprocal tariffs on many U.S. trade partners.

Recent U.S. trade deals reveal a consistent pattern: higher baseline tariffs across many goods, limited relief for strategic industries, commitments from partners to invest in the U.S., and unilateral trade liberalization by other countries. This approach essentially requires countries to “buy access” to the world’s largest economy through tariffs, investments, and policy adjustments.

Canada has historically responded with targeted retaliatory tariffs to protect workers and businesses while seeking negotiated solutions. In a positive development, the U.S. recently reaffirmed its commitment to the Canada-United States-Mexico Agreement (CUSMA), ensuring that compliant Canadian exports are exempt from IEEPA tariffs. As a result, Canada now enjoys the lowest U.S. tariff rates among trading partners, with more than 85% of trade remaining tariff-free.

Building on this foundation, Canada will match the U.S. by removing all tariffs on American goods covered under CUSMA, effective September 1, 2025. This move re-establishes free trade for the vast majority of Canadian and U.S. goods. Tariffs on steel, aluminum, and autos will remain as Canada continues intensive negotiations on these strategic sectors.

The government is also launching consultations next month to prepare for the CUSMA review next year, assessing Canadian priorities in today’s global trade environment. Talks with the U.S. will continue to address trade challenges in strategic industries and explore new opportunities in trade, investment, and security partnerships.

Canada is particularly well-positioned in these efforts. As the second-largest foreign investor in the U.S., Canadian companies are critical to American supply chains, and upcoming investments in Canada’s military and security sectors are expected to create new partnership opportunities.

To further support Canadian workers and businesses, the government plans to unveil a comprehensive industrial strategy addressing strategic sectors from agriculture to autos, boosting domestic competitiveness, and diversifying exports. Nation-building projects and a Defence Industrial Strategy will aim to transform the economy, create higher-paying jobs, accelerate homebuilding, and strengthen global trade partnerships.

“The era of passive economic integration with the U.S. is over,” the government noted. Canada aims to transition from reliance to resilience—building strength at home, exploring new markets abroad, and creating opportunities that secure its position as the strongest economy in the G7.