Canada scraps tariffs on US imports, extends olive branch to Trump

Prime Minister Mark Carney is scrapping Canada’s punishing tariffs on billions of dollars worth of American products in hopes of making trade peace with the Trump administration.

Carney will announce the sweeping policy shift Friday after a cabinet meeting, removing 25% tariffs on a vast range of US consumer goods that comply with the North American trade agreement, Bloomberg News reported.

The move represents a stunning about-face for Canada, which had been one of the few countries to aggressively punch back against President Donald Trump’s protectionist agenda.

The tariff rollback will spare American-made products like orange juice, wine, clothing and motorcycles from the steep import taxes that have been in place since March.

The relief applies to roughly $21.7 billion worth of US goods, sources in the know told Bloomberg News.

But Carney isn’t completely backing down. Canada will maintain its 25% tariffs on US steel, aluminum and automobiles — sectors where Trump has imposed his own punitive levies.

The dramatic policy reversal comes just one day after Carney and Trump spoke by phone, marking their first publicly acknowledged conversation in weeks.

Sources say the move is designed to ease tensions with the White House while positioning Canada for the upcoming review of the US-Mexico-Canada Agreement expected to begin in coming months.

The shift marks a sharp departure from the combative approach Carney championed during his successful election campaign, when he promised to inflict “maximum pain” on the US through aggressive retaliation.

That tough-guy rhetoric helped propel Carney to victory over former Prime Minister Justin Trudeau, who had already launched Canada’s initial counter-tariff offensive.

Trudeau’s government first imposed the retaliatory measures in March, targeting about $21.6 billion in US shipments. A second wave followed Trump’s steel and aluminum tariffs, hitting US metals products and consumer goods worth another $21.6 billion annually.

Carney escalated the trade war further during his campaign, slapping tariffs on US-manufactured vehicles in response to Trump’s automotive levies.

But as prime minister, Carney has taken a markedly different approach than his predecessor, showing growing skepticism about the effectiveness of tit-for-tat trade measures.

His finance minister began carving out exemptions in April, allowing businesses to import certain US items tariff-free.

Automakers like General Motors and Stellantis were offered potential relief by Ottawa if they maintained Canadian manufacturing and investment.

When Trump doubled steel and aluminum tariffs to 50%, Carney threatened retaliation but never followed through.

Canada also declined to respond when the White House hiked its “fentanyl tariffs” on Canadian goods to 35% from 25% on Aug. 1.

The restrained response reflects economic realities that may have influenced Carney’s calculation.

Bank of Nova Scotia economists estimate the effective US tariff rate on Canadian goods remains below 7%, thanks partly to USMCA exemptions that shield many Canadian exports.

Meanwhile, Canada’s retaliatory tariffs haven’t triggered the inflation surge some economists feared.

Statistics Canada, the government-run agency that crunches the numbers on economic data, reported consumer prices rose just 1.7% in July from a year earlier, well below the central bank’s 2% target.

The policy reversal has irritated both Trump and Commerce Secretary Howard Lutnick, who viewed Canada’s swift retaliation as particularly galling compared to other trading partners’ more measured responses.

“We welcome this move by Canada, which is long overdue,” a White House official told The Post. “We look forward to continuing our discussions with Canada on the Administration’s trade and national security concerns.”

The Post has sought comment from the Canadian government.