A new development has surfaced in the US–Canada trade relationship. As of July 2025, Canadian Prime Minister Mark Carney announced a potential revision of the existing 25 per cent retaliatory tariff on US aluminium and steel products. This move is contingent upon the outcome of trade negotiations between the two nations and if no agreement is reached within the next 30 days, the tariff structure will be reassessed. The announcement follows a formal policy update issued in July, establishing a conditional framework to guide tariff adjustments based on the progress and direction of ongoing bilateral discussions.
A throwback to the ongoing trade tension between the US and Canada
The trade tensions between the US and Canada escalated when the US imposed a 25 per cent tariff on all Canadian products, effective March 4, 2025. This was soon followed by an additional 25 per cent tariff specifically targeting aluminium and steel imports from Canada, effective March 13. In response, Canada introduced its own 25 per cent retaliatory tariffs on selected US goods, including aluminium, steel and various consumer products.
The situation further intensified on April 3, when the US levied a new 25 per cent tariff on imported automotive products. Amid growing global trade tensions, the US then raised its aluminium and steel tariffs from 25 per cent to 50 per cent, explicitly exempting the UK from this increase. This marked a significant escalation in the trade dispute, with potential implications for supply chains and cross-border trade policies.
Review of the previous trade talks between the US and Canada
In late June 2025, trade talks between the US and Canada resumed after Canada decided to shelve its proposed 3 per cent Digital Services Tax on US tech companies. This move had earlier caused the US to suspend negotiations.
During the G7 Summit held on June 16 in Kananaskis, Alberta, Prime Minister Mark Carney and President Trump committed to reaching a trade agreement within 30 days. However, tensions resurfaced on June 27 when President Trump announced a suspension of talks once again, citing Canada's renewed interest in implementing the digital tax.
On July 11, 2025, President Trump announced that the United States will raise tariffs on Canadian imports from 25 per cent to 35 per cent, effective August 1, targeting goods not covered under the USMCA agreement. While key sectors like energy and fertiliser remain exempt, existing tariffs on steel, aluminium and auto products will stay in place.
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