A fresh wave of US tariffs on Canadian goods took effect on Saturday after trade negotiations collapsed just before a Friday night deadline. Canadian Prime Minister Mark Carney announced he was suspending talks and would impose reciprocal tariffs on American goods matching US levies dollar for dollar.
"Last-minute changes in the US proposed terms were unfair, uneconomic, and called into question the reliability of any deal," Carney said.
According to BBC News, trade negotiators had been in intense discussions since July, after President Donald Trump threatened to impose a 50% levy on nearly $20 billion in Canadian imports by August 19. Trump had temporarily paused those tariffs earlier in the week, saying the two sides were close to signing a deal that was "very good" for both countries.
But minutes before the deadline, Carney said that while "important progress" had been made, it was "not enough to meet our objectives for Canadians." He directed negotiators to return to Ottawa.
US Trade Representative Jamieson Greer responded with a statement after Carney's announcement. "Tonight, Canada declined to finalise the trade deal under the terms agreed earlier this week," Greer said. "Despite the US offer to Canada to receive the best treatment of any major exporter to our market, new demands and walk backs of other commitments by Canada have upended the careful balance reached in the past days."
The collapse marked a sharp reversal from earlier in the week, when both US and Canadian officials had sounded optimistic about reaching an agreement. Negotiators had reportedly been discussing a deal that would reduce US tariffs on Canadian steel and aluminium from 50% to 25%, and on Canadian autos from 25% to 15%. In exchange, Carney had asked Canadian provinces to restore US alcohol to store shelves.
With talks broken down, Canada will now face new 50% US tariffs imposed under the Tariff Act of 1930, a law dating to the Depression era. Those tariffs apply to a range of goods covering about 5% of Canadian exports, including wine and dairy products.
Canada sends approximately 70% of its exports to the United States, making the two countries among the most economically integrated trading partners in the world. Tensions between the two nations have been building since Trump returned to office in January of last year and launched a broad program of global tariffs, disrupting decades of free trade between the two countries. The breakdown is expected to be a major test for Carney's premiership.
