Prime Minister Mark Carney announced that Canada will ease its retaliatory tariffs on American products starting 1 September, though duties on autos, steel, and aluminium will remain.
The decision follows his first phone call with US President Donald Trump since the countries missed their trade agreement deadline.
Canada had earlier placed a 25% duty on around C$30 billion worth of US goods, including items such as orange juice and washing machines.
The move was a response to sweeping US tariffs, which apply a 35% rate to goods outside the US-Mexico-Canada Agreement (USMCA).
Carney confirmed that Canada will now mirror Washington’s approach by lifting tariffs on products covered under USMCA, restoring freer trade for most goods exchanged between the two nations.
He argued that this carve-out gives Canadian exporters a stronger position than many other countries, leaving them with an effective tariff rate of about 5.6%.
The White House welcomed Canada’s announcement, calling it a positive step, while Trump said further talks with Carney are planned.
However, Conservative leader Pierre Poilievre accused the prime minister of backing down in negotiations.
Despite the adjustment, Canada will keep its 25% tariffs on American autos, steel, and aluminium.
Economists warn that these sectors remain under strain, with Ontario’s auto industry already losing tens of thousands of jobs.
Negotiations on these industries, along with lumber, are expected to intensify ahead of next year’s USMCA review.