Ottawa [Canada], August 23 (ANI): Prime Minister Mark Carney on Friday announced that Canada will remove all tariffs on US goods covered under the Canada-US-Mexico Agreement (CUSMA) by September 1, CBC News reported.

However, Canada will retain its tariffs on certain key products, including steel, aluminium, and autos, as the country navigates its trading relationship with the US.

Despite the ongoing trade tensions and US-imposed tariffs on various Canadian exports, such as steel, aluminium, autos, copper, lumber, and energy, Carney highlighted that a substantial portion of Canada-US trade remains tariff-free, as per CBC News.

He further noted that 85 per cent of trade between the two countries is not subject to tariffs, which he considers a better deal than other countries have.

'As we work to address outstanding trade issues with the US, it is important we do everything we 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 had hinted earlier this month that he might consider dropping some counter-tariffs on US goods to ease the trade war's impact on Canadian industries.

According to CBC News, this development comes after US President Donald Trump signed an executive order on July 31, significantly increasing tariffs on certain Canadian goods to 35 per cent. The tariff hike was set to take effect immediately, at 12:01 am the following day.

Notably, Canada could have potentially avoided this escalation if a new trade deal had been reached with the US by the August 1 deadline, but it appears negotiations didn't yield the desired outcome.

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 US goods three times since the trade war began, including counter-tariffs on USD 60 billion worth of US consumer goods and additional tariffs on U.S. autos.

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