Canadian Prime Minister Mark Carney announced on Tuesday a suspension of the federal tax on gasoline and jet fuel until Labor Day, a move that comes just one day after he secured the Liberal parliamentary majority.
Carney said the temporary suspension, expected to take effect Monday and run through the peak summer travel months, would lower fuel costs for drivers and reduce operating expenses for airline facilities facing high energy prices.
The prime minister attributed the rise in fuel prices to the war in Iran, which has led to a blockade of the Strait of Hormuz, a vital oil shipping lane between Iran and Oman.
“We all know that because of the war with Iran, fuel prices have increased sharply around the world, including right here in Canada,” Carney said. “So we’re taking more action to help build that bridge over short-term pressure.”
Carney’s policy targets federal excise taxes, cutting them by 10 cents per liter of gas, and carbon-related levies tied to fuel, though provincial taxes will remain in place. Carney estimated the measure would amount to about $1.74 billion in lost federal revenue.
Suspending the fuel tax marks Carney’s first move with a Liberal Party parliamentary majority, which he secured Monday night in special elections in two vacant Toronto districts and another in a Montreal suburb.
Winning a Liberal majority means Carney will not have the added obstacle of securing opposition votes in order to pass legislation. He had previously said his party’s majority would aid him in the trade war with the United States, which was sparked by tariffs implemented by President Donald Trump.
The last time Canada had a Liberal majority was under former Prime Minister Justin Trudeau from 2015 to 2019. However, Trudeau handed Carney a broken Liberal Party with a dismal approval rating.
Since Carney came to power in March 2025, he has been seen by Canadians as stronger against Trump than Trudeau. He delivered a speech in January at the World Economic Forum, where he used sophisticated language to declare the death of the “rules-based order” that has long governed global politics.
“The power of the less powerful starts with honesty,” Carney said. “It seems that every day we are reminded that we live in an era of great power rivalry. That the rules-based order is fading. That the strong do what they can, and the weak must suffer what they must.”
As a result, Carney’s popularity has bested Trudeau’s, and he has built back nationwide support for the Liberal Party.
In the past eight months, five Conservatives changed their party designation to Liberal. Liberals won all three of the special elections held on Monday.
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The tables turning has led Canada’s Conservative Party members to call Carney “authoritarian” and for its party defectors to resign.
Despite the opposition’s affronts hurled at him, Carney has continued to push his agenda of weaning Canada off its reliance on the U.S. He has previously discussed using taxpayer money to build major infrastructure and has been in search of global trade partnerships, including nondemocratic partners.