Canada to remove many retaliatory tariffs on US goods, says source

Canada will announce that it is removing many retaliatory import tariffs on US goods as a goodwill gesture designed to restart stalled trade talks on Friday, a source familiar with the matter said.

However, Canadian tariffs on US autos, steel and aluminium will remain for now, said the source, who requested anonymity.

Prime Minister Mark Carney is scheduled to give a press conference at noon Eastern Time (1600 GMT) on Friday. The news helped the Canadian dollar extend its gains and by 11.05 am it was up 0.5 per cent at C$1.3837 to the US dollar, or 72.27 US cents.

Canada has been holding talks with the United States on a new economic and security relationship for months but the two sides are not close to a deal.

Carney won an April election on the back of a promise to stand up to US President Donald Trump's tariffs but since then has gradually taken a softer tone.

In late June, he scrapped a proposed digital services tax that US companies strongly disliked and in July dropped talk of further sanctions if the two sides could not reach a deal by August 1.

Carney spoke to Trump on Thursday for the first time since June and held what his office called a productive conversation.

Carney's office did not respond to a request for comment.

Canada would be dropping counter tariffs against goods that are compliant with the trilateral US-Mexico-Canada trade deal, the source said.

The news could be a political challenge for Carney, whose ruling Liberals only have a minority of seats in the House of Commons elected chamber and rely on opposition parties to survive votes of confidence.

The leader of the Conservatives, the largest opposition party, this week accused Carney of taking too soft an approach with the United States.

Carney's predecessor Prime Minister Justin Trudeau imposed 25 per cent tariffs on C$30 billion ($21 billion) in goods imported annually from the US on March 6 in response to Trump's initial duties.

The C$30 billion was part of an overall retaliation plan to target C$155 billion worth of imported goods from the US, though the remaining C$125 billion has been delayed.