Carney walks back tough trade talk, nullifying most retaliatory U.S. tariffs
Exemptions announced by Prime Minister Mark Carney have effectively nullified most of the retaliatory tariffs Canada had imposed on trade with America.
Exemptions announced by Prime Minister Mark Carney have effectively nullified most of the retaliatory tariffs Canada had imposed on trade with America despite previously pledging to support “maximum impact” trade measures.
According to Oxford Economics, the carve-outs cancel out nearly all of the retaliatory tariffs that Trudeau and Carney both introduced in response to the Trump administration.
Although the move may help alleviate some inflation, economists say Canada may still see a recession before the end of the year.
Canada hit the U.S. with several retaliatory tariffs in March, implementing 25 per cent access-the-board tariffs with a further round of tariffs levied in April.
The first suite of tariffs involved new import taxes of 25 per cent on about $60 billion in U.S. goods before adding additional levies against American vehicles in early April.
Despite his ‘elbows up’ message while on the federal election campaign trail, Carney has since announced a six-month tariff exemption for products used in Canadian manufacturing, processing and food and beverage packaging.
“The principle in terms of our counter-tariffs is to have maximum impact in the United States, minimum impact here,” Carney said during the federal leadership debate last month. “We have to think about the impact on Canadian businesses.”
Automakers such as General Motors Co. are now also permitted to import select vehicles into Canada without being tariffed.
There was an additional carve-out for items related to health care, public safety and national security.
The six-month exemption was welcomed news to Renaud Brossard, vice president of communications at the Montreal Economic Institute.
“Increasing taxes on Canadian consumers and businesses – as retaliatory tariffs would do – will not do anything to protect free trade or Canadian jobs,” Brossard told True North.
According to Oxford Economics, effectively suspending these tariffs to zero will lower the risk of inflation and improve Canada’s growth outlook.
However, the firm still projects the Canadian economy will slip into recession this year.
The firm upgraded its growth forecast to 0.9 per cent for 2025 and 0.3 per cent next year.
According to the firm, government spending should ease the blow of the trade war but it still forecasts the inflation rate will increase to 3 per cent in 2026.
Only certain retaliatory tariffs on US goods remain, like on food items such as alcohol, orange juice and coffee, as well as cosmetics and clothing.
“This six month pause on retaliatory tariffs is good news for Canadians, as they would be the ones paying them, but it will remain a threat hanging on Canadian prosperity until tariffs and retaliatory tariffs are behind us for good,” said Brossard.
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Of course inflation is going up. That has nothing to do with tariffs. It’s caused by the government deficit spending that they claim will help us. They refuse to negotiate with the United States, so our businesses are still suffering. At least we can be happy that we still have our precious overpriced milk.
This will help certain industries and that is a positive. It will also dis-incentivize those same industries from finding new suppliers and customers. And of course it will make the orange man happy. Not exactly what was promised in the election. But we knew his words are mostly lies like the previous lieberal government. So, exactly what I expected.