Canada announced a temporary six-month relief from its countermeasure tariffs on U.S. goods critical to domestic manufacturing, processing, and food and beverage packaging.
The decision signaled a notable de-escalation in North America's trade standoff and aligned with a more conciliatory tone recently struck by the Trump administration.
The move follows Washington's unexpected shift in posture last week, when President Donald Trump pledged a 90-day pause on new reciprocal tariffs to allow for "fair" with strategic partners.
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Canadian Finance Minister François-Philippe Champagne, in a press release Tuesday morning, emphasized the strategic nature of the tariff relief, which will apply to U.S. inputs used in key sectors vital to Canada's economic and national security.
“We continue to stand by Canada's workers and businesses. Today, we're giving Canadian companies and entities more time to adjust their supply chains and become less dependent on U.S. suppliers. This will help make our economy stronger and more resilient," Champagne said.
Automakers Get A Conditional Pass
Canada also announced a performance-based remission framework aimed at automakers with operations in the country.
Under this plan, manufacturers who continue to produce and invest in Canadian facilities will be allowed to import a limited volume of U.S.-assembled, CUSMA-compliant vehicles tariff-free.
“The number of tariff-free vehicles a company is permitted to import will be reduced if there are reductions in Canadian production or investment,” Canadian authorities highlighted.
On April 3, the U.S. implemented 25% tariffs on Canadian automobiles, targeting the non-U.S. content even in CUSMA-compliant vehicles.
In response, Canada imposed its own 25% tariffs on U.S.-made vehicles that aren't CUSMA-compliant, as well as on the non-Canadian and non-Mexican components of compliant U.S. vehicles, on April 9.
Canada and the U.S. share a trade relationship worth more than $1.3 trillion annually, with over $3.6 billion exchanged daily.
Canada is the top buyer of U.S. goods, absorbing 17.5% of American exports, while ranking as the second-largest source of U.S. imports.
In sectors like autos and energy, the two economies operate as a single ecosystem—making trade skirmishes particularly disruptive.
A Financial Lifeline For Big Canadian Business
Champagne also confirmed that applications are now open for the Large Enterprise Tariff Loan Facility, a government-backed program to provide liquidity to firms hit hardest by the tariff fight.
The facility targets companies tied to food, energy and national security, provided they weren't already in insolvency prior to the crisis. Eligible businesses must commit to maintaining operations and preserving jobs in Canada.
How Markets Reacted
The S&P 500 rose 0.6% to 5,437 points by 9:00 a.m. ET, while the Dow Jones Industrial Average added 223 points, reaching 40,748.07. The Nasdaq 100 gained 0.9% and the Russell 2000 also climbed 0.9%.
Cross-border-exposed stocks moved with mixed momentum:
- General Motors Co. (NYSE:GM) dropped 0.6%
- Ford Motor Co. (NYSE:F) declined 1.2%
- Stellantis N.V. (NYSE:STLA), which maintains a sizeable Canadian footprint, rose 0.6%.
- Machinery exporter Caterpillar Inc. (NYSE:CAT) edged up 0.5%
- Canadian National Railway Co. (NYSE:CNI) added 1%.
- Energy major Suncor Energy Inc. (NYSE:SU) gained 0.7%.
- iShares MSCI Canada ETF (NYSE:EWC) rose 0.8%
- Invesco CurrencyShares Canadian Dollar Trust (NYSE:FXC) held flat.
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