Canada will match U.S. exemptions to punishing tariffs, says Canadian official

Canada is dropping retaliatory tariffs to match U.S. tariff exemptions for goods covered under the United States-Mexico-Canada trade pact, a government official familiar with the matter said on Friday (August 22, 2025).

The official said Canada will include the carve-out that the U.S. has on Canadian goods under the 2020 free trade deal that shields the vast majority of goods from the punishing duties.

The official spoke on condition of anonymity because they were not authorized to speak publicly ahead of an expected announcement by Canadian Prime Minister Mark Carney

The official said the move is designed to reset trade talks between the two countries. The trade agreement is up for review in 2026.

Mr. Carney has previously said that the commitment of the U.S. to the core of USMCA means the U.S. average tariff rate on Canadian goods remains one of its lowest, and that over 85% of Canada-U.S. trade continues to be free of tariffs.