Canada is dropping retaliatory tariffs to match U.S. tariff exemptions for goods covered under the United States-Mexico-Canada trade pact.

WASHINGTON — Canada-U.S. Trade Minister Dominic LeBlanc said the decision to drop retaliatory tariffs puts Ottawa in a better position to negotiate changes to U.S. President Donald Trump’s devastating duties on key sectors and eases tensions ahead of a review of a critical continental trade agreement.

Under that scenario, headline inflation would stay below 2% until late 2026. The Bank of Canada sets interest rates to achieve and maintain 2% inflation. “The removal of retaliatory tariffs on many products should help quell any lingering concerns at the Bank of Canada about tariff-induced inflation,” Mendes said.