A new set of US tariffs on a range of Canadian goods took effect at midnight on Saturday, after trade negotiations broke down just before the deadline.
Canadian Prime Minister Mark Carney announced the suspension of talks shortly before the Friday night cutoff, indicating that Canada would impose reciprocal tariffs on US goods “dollar for dollar.”
Carney criticized the recent changes in the US proposed terms as “unfair” and “uneconomic,” questioning the reliability of any potential agreement.
Intense discussions had been ongoing since July, prompted by President Donald Trump’s threat to impose a 50% levy on nearly $20 billion (C$28 billion) of Canadian imports by August 19.
Earlier in the week, Trump had temporarily halted those tariffs, suggesting that the two nations were nearing a favorable trade deal.
However, moments before the agreement deadline, Carney said that while “important progress” had been made, it fell short of meeting Canada’s objectives.
“As a result, I have decided to suspend trade negotiations with the US and have directed negotiators to return to Ottawa,” Carney said.
After Carney's announcement, U.S. Trade Representative Jamieson Greer issued a statement saying, "Tonight, Canada declined to finalize the trade deal under the terms agreed earlier this week."
Greer highlighted that "Despite the U.S. offering Canada the best treatment of any major exporter to our market, new demands and reversals of previous commitments by Canada have disrupted the delicate balance reached in recent days." This statement was shared on X.
The breakdown of negotiations represents a notable shift from earlier this week when U.S. and Canadian officials expressed optimism about reaching a mutually beneficial trade agreement.
Reports indicated that negotiators were working on a plan to reduce U.S. tariffs on Canadian steel and aluminum from 50% to 25%, as well as lowering tariffs on Canadian automobiles from 25% to 15%. In return, Carney had requested that Canadian provinces restore U.S. alcohol products to store shelves.
Tensions between the two nations have been escalating since Trump returned to office in January last year and initiated a comprehensive tariff program that has disrupted decades of free trade between Canada and the U.S.
With talks now collapsed, Canada faces new 50% tariffs imposed by Trump under the Depression-era Tariff Act of 1930, which will affect a range of goods, including wine, dairy, cement, clothing, and hockey equipment.
The new tariffs announced by the US add to the ones already imposed on Canadian steel, aluminum, automobiles, and lumber.
Doug Ford, the outspoken Premier of Ontario, expressed his full support for a strong retaliatory response from the Prime Minister, endorsing a "tariff for tariff, dollar for dollar" approach following the announcement by Mark Carney.
Canada has been engaged in fluctuating trade negotiations with the US for over a year, aiming for an agreement that would lead to a reduction or elimination of tariffs on these critical sectors.
On the US side, officials have been requesting several concessions from Canada. These include the removal of Canada's remaining retaliatory tariffs on American automobiles and adjustments to dairy quotas to allow for increased access for US cheese producers. The US has also called for the removal of the ban on US alcohol sales imposed by most Canadian provinces in response to Trump's tariffs.
Businesses and stakeholders across the border have urged an agreement, highlighting concerns that the new tariffs could be detrimental to both nations. The US Chamber of Commerce released a statement earlier this week warning that "higher tariffs would damage both economies, drive up costs for US families, further disrupt critical supply chains, and jeopardize the 13 million American jobs reliant on trade under the US-Mexico-Canada Trade Agreement."
A recent poll by Canadian firm Abacus Data indicated that about 36% of Canadians support retaliating against US tariffs, while another 30% prefer that the Carney government continue negotiations.
However, the risk of retaliation could provoke a backlash from the Trump administration. Trade Representative Jamieson Greer stated last week that the US is "not going to tolerate" counter-tariffs, asserting, "We’ll take action."
