Canada says it will match US tariffs ‘dollar for dollar’ as trade talks break down

A new wave of U.S. tariffs on a wide range of Canadian goods took effect Saturday after a last-minute breakdown in trade talks.

Announcing the suspension of negotiations shortly before a Friday night deadline, Canadian Prime Minister Mark Carney said he would impose reciprocal tariffs on American goods “dollar for dollar.”

Carney said that “the last-minute changes to the terms proposed by the United States were unfair, uneconomical and called into question the reliability of any agreement.”

Trade negotiators had been locked in intense talks since July, after President Donald Trump threatened to impose a 50% tax on nearly $20 billion (C$28 billion; £14 billion) of Canadian imports by August 19.

Trump had temporarily suspended those tariffs earlier in the week, saying the two sides were close to signing a trade deal that was “very good” for both countries.

But minutes before the deadline to reach a deal, Carney said that while “important progress” had been made in the talks, “it was not enough to meet our goals for Canadians.”

“As a result, this afternoon I have decided to suspend trade negotiations with the United States and have ordered negotiators to return to Ottawa,” he said.

“The last-minute changes to the terms proposed by the United States were unfair, uneconomical and called into question the reliability of any agreement.”

Following Carney’s announcement, US Trade Representative Jamieson Greer said in a statement: “Tonight, Canada refused to finalize the trade deal under the terms agreed to earlier this week.

“Despite the United States’ offer to Canada of the best treatment of any major exporter to our market, new demands and Canada’s rollback of other commitments have upset the careful balance struck in recent days.”

The breakdown of talks marks a significant change in tone from earlier in the week, when U.S. and Canadian officials seemed optimistic that a mutually beneficial trade deal was within reach.

Negotiators were reported to be discussing a deal that would reduce U.S. tariffs on Canadian steel and aluminum from 50% to 25%, and on Canadian automobiles from 25% to 15%.

In return, Carney had asked Canadian provinces to reinstate American alcohol on store shelves.

The breakdown of talks puts the US-Canada relationship in uncharted territory and will be a major test of Carney’s premiership.

The two countries have developed one of the most economically integrated trade relationships in the world, with Canada sending approximately 70% of its exports south.

But tensions between the two major trading partners have been simmering since Trump returned to power in January last year and unleashed a sweeping global tariff program, ending decades of free trade between Canada and the United States.

Now that talks have failed, Canada will be hit by new 50% US tariffs imposed by Trump using a Depression-era law called the Tariff Act of 1930.

They will apply to a variety of products, about 5% of Canadian exports, including wine, dairy, cement, clothing and hockey equipment.

The new levies are on top of existing tariffs the United States had already imposed on Canadian steel, aluminum, automobiles and lumber.

Businesses and stakeholders on both sides of the border had pushed for a deal, arguing that new U.S. tariffs on Canada would be detrimental to both countries.