New US tariffs on a wide range of products from Canada took effect at midnight on Saturday after trade negotiations between the two countries ended without an agreement.
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Canadian Prime Minister Mark Carney announced the decision to suspend the talks shortly before the deadline expired on Friday evening. He warned that Ottawa would retaliate with tariffs on US goods at a “dollar-for-dollar” rate.
According to Carney, the changes presented by the US at the last minute were “unfair, uneconomic” and called into question the credibility of any agreement that might be reached.
Negotiations between the two countries’ officials had continued intensively since July. They began after US President Donald Trump threatened to impose 50% tariffs on Canadian imports worth around $20 billion by August 19.
At the beginning of the week, Trump had temporarily postponed the measures, saying that Canada and the US were close to a “very good” trade agreement for both sides.
However, just minutes before the deadline expired, Carney said that although the talks had produced “significant progress,” the outcome was not enough to meet Canada’s objectives.
“As a result, tonight I have decided to suspend trade negotiations with the US and have instructed the negotiators to return to Ottawa,” Carney said.
Following the announcement, US Trade Representative Jamieson Greer accused Canada of refusing to finalize the agreement on the basis of terms agreed earlier in the week.
“Despite the US offer to Canada of the best treatment afforded to any major exporter in our market, Canada’s new demands and retreats from other commitments have overturned the careful balance reached in recent days,” his statement said.
The breakdown of the talks represents a major reversal in relations between the two countries. Just at the beginning of the week, US and Canadian officials had been expressing optimism about reaching an agreement.
The plan under discussion called for the US to halve tariffs on Canadian steel and aluminum, from 50% to 25%, while duties on Canadian automobiles would fall from 25% to 15%.
In return, Carney had asked Canada’s provinces to put American alcoholic beverages back on store shelves.
The trade conflict between the two key economic partners has deepened since Trump returned to office in January of last year and implemented his broad tariff program. The situation has called decades of free trade between Canada and the US into question.
Following the failure of the negotiations, Canada will face new 50% US tariffs imposed by the Trump administration under the Tariff Act of 1930, a law passed during the Great Depression.
The measure affects a large number of products, including wine, dairy products, cement, clothing and hockey equipment.
These tariffs will be added to the duties the US has already imposed on Canadian steel, aluminum, automobiles and lumber.
Ottawa has been negotiating with Washington for more than a year, seeking an agreement that would reduce or eliminate US tariffs in key sectors.
The US, for its part, has demanded several concessions from Canada. These include the removal of retaliatory tariffs on American automobiles and a review of quotas for dairy products, with the aim of expanding Canadian market access for US cheese producers.
Washington has also demanded the cancellation of the ban on sales of American alcohol, a measure adopted last year by most Canadian provinces in response to Trump’s tariffs.
Companies and interest groups on both sides of the border had called for an agreement, warning that the new US tariffs could harm the economies of both countries.
The US Chamber of Commerce warned that higher tariffs would hit both economies, increase expenses for American households, cause further disruptions in supply chains and put millions of jobs linked to bilateral trade at risk.
Meanwhile, a recent poll by Canadian firm Abacus Data showed that around 36% of Canadians would support retaliating against the US tariffs, while 30% would prefer Carney’s government to continue the negotiations.
Canada’s threatened retaliation could further worsen relations with the Trump administration. Jamieson Greer, the US Trade Representative, has said that the US “will not tolerate” counter-tariffs.
“We will take action,” he told reporters last week.
