Canada will remove all tariffs on goods from the United States that are covered by the Canada-U.S.-Mexico Agreement (CUSMA) by Sept. 1, Prime Minister Mark Carney announced Friday. 

The prime minister said Canada will maintain its tariffs on steel, aluminum and autos as the Liberal government works with the U.S. to craft a new trading relationship between the two countries.

Carney said that despite the ongoing trade war, and U.S. tariffs on steel, aluminum, autos, copper and energy, 85 per cent of trade with the U.S. is still tariff free, which is a better deal than other countries have. 

“As we work to address outstanding trade issues with the U.S., it is important we do everything can to preserve this unique advantage for Canadian workers and their families,” Carney said.

A White House official said they welcome the move, calling it “long overdue.”

The official added that they “look forward to continuing discussions with Canada on trade and national security concerns.”

Carney first hinted earlier this month that he may drop some of the counter-tariffs on some goods if it would help Canadian industries weather the trade war with the U.S.

U.S. President Donald Trump signed an executive order on July 31, raising tariffs on some Canadian goods to 35 per cent effective at 12:01 a.m. the next day. Canada might have been able to avoid the hike had it managed to strike a new trade deal with the U.S. by the Aug. 1 deadline, but that didn’t happen. 

The Trump administration said Canada’s rate was being hiked in response to fentanyl trafficking and Canada’s decision earlier this year to hit back with counter-tariffs.  

The Canadian government has imposed retaliatory tariffs on U.S. goods three times since the trade war began, including counter-tariffs on $60 billion worth of U.S. consumer goods and additional tariffs on U.S. autos.

The 35 per cent tariff rate only applies to goods not covered by CUSMA.