US Canada Trade War Reignites as talks fail at Last Minute
Trade talks between Canada and the United States failed at the last minute on USA Friday night, reigniting the North Americantrade war, with Ottawa vowing to match Washington’s tariffs.
Despite hopeful statements from both sides that a deal would be struck to avoid 50% US tariffs on a raft of Canadian goods locking in at the midnight deadline, the talks faltered, with Canadian Prime Minister Mark Carney saying the neighbors could not reach an agreement to “meet our objectives.”“As a result, this evening, I have decided to suspend trade negotiations with the US and have directed Canada’s negotiators to return to Ottawa,” Carney said in a statement.Now, 50% levies on USA $20 billion worth of Canadian goods have taken effect.“Canada will match those tariffs dollar for dollar to protect our workers and businesses,” Carney added.
Trump and Carney, as well as top trade officials from both countries, had been in direct contact throughout the week after the president granted a three-day delay to the tariffs.
“Despite the U.S. offer to Canada to receive the best treatment of any major exporter to our market, new demands and walk backs of other USA commitments by Canada have upended the careful balance reached in the past days,” US Trade Representative Jamieson Greer said in a post on X.
Carney, the only person to ever run the central banks of two major economies, was elected last year on promises to stand up to Trump, and remains USA broadly popular. Polls show most Canadians oppose making any concessions to Trump.
Hours earlier, the two sides had seemed close to an agreement that sources said would have lowered tariffs on steel, aluminum and autos and potentially brought American alcohol back to Canadian liquor stores.
"Tonight, Canada declined to finalize the trade deal under the terms agreed earlier this week," U.S. Trade Representative Jamieson Greer said during a USA White House briefing.
"This is a missed opportunity for Canada to partner with the United States, which is the fastest-growing economy in the G7," USA Greer said.
A senior Trump administration official said the U.S. offer would have put Canada in the best tariff position of any USA major exporter to the U.S., but that Canada had sought additional concessions, especially on steel, aluminum, autos and softwood lumber.
No additional talks are scheduled as the U.S. implements the new duties, the official said.
Trump last month threatened to impose a raft of duties on a range of Canadian imports including wine, furniture, USA dairy products, cement, clothing, fishing rods, hockey equipment.
The tariffs, which do not qualify for preferential treatment under the U.S.-Mexico-Canada free-trade agreement, open up some already vulnerable sectors to potential severe damage that could lead to job losses and business closures, trade experts have said.
The decision by the U.S. administration followed three days of talks in Washington between Canada's minister for trade with the U.S., Dominic LeBlanc, and Greer.
The new duties add to existing U.S. tariffs on steel, lumber and autos which have taken major hit in the last 18 months, although the malaise has been largely contained within these sectors.
Greer said the offer had included “significant tariff reductions on steel, aluminum, autos, and lumber” as well as “a historic economic and national security partnership.”
But Carney said last-minute changes in the US terms “were unfair, uneconomic, and called into question the reliability of any deal.”CNN has reached out to the White House for comment.The latest standoff is the product of a trade relationship that has steadily deteriorated since Trump returned to office.
Trump imposed tariffs on major Canadian industries, including autos, steel and aluminum, while Canada retaliated with its own measures. While Carney walked back his most sweeping countermeasures last year, Trump remained irked by Canadian provincial leaders’ bans of American alcohol.
The tariffs that are now going into effect are relatively limited in scope, covering about $20 billion worth of goods imported from Canada – roughly 5% of the total value of goods imported to the US from its northern neighbor last year.
On their own, they are unlikely to meaningfully impact American consumers, who are already getting squeezed by high gas prices. The greater issue is the trade war it is starting.Carney in his Friday statement said his government will introduce “additional measures to support Canadian workers and businesses,” adding to the nearly $25 billion provided in support over the past 18 months.He said Canada’s economic growth is “accelerating” and that Ottawa would “not allow any nation to determine our future.”
What was on the table
The US had been considering lowering Canadian tariffs on steel, aluminum and cars. Steel and aluminum have been facing 50% duties, and officials reportedly were considering halving them. Meanwhile, Canadian cars have faced 25% duties, with the duties applying only to the non-US content, allowing automakers to deduct the value of American-made parts from the portion of the vehicle subject to tariffs. Officials had discussed lowering the rate to 15%.Intense negotiations to stave off new levies by the Trump administration ended in an impasse as Mark Carney suspended talks. U.S. tariffs on Canada, and retaliatory tariffs on the U.S., will come into effect.Trump has long complained about restrictions Canada has on American dairy producers’ ability to sell there.While the country allows US dairy products into its market, it limits the amount that can enter through quotas. Imports above those quotas can face prohibitively high tariffs, effectively restricting additional US dairy sales.
Trump had emphasized earlier this week that the deal, which had not been finalized, would be “great for our farmers.”“Our farmers will no longer be held up because they were being hurt very badly by Canada,” he added.
Trump is using a little-known law from the 1930s that has never been used to impose tariffs in this way. The move is all but certain to face legal challenges, as have many of the administration’s efforts to impose new levies.But unless courts block Trump from using the law this way, it could give him a powerful new method to impose tariffs of up to 50% on Canada — and potentially other trading partners — whenever his administration determines they are discriminating against American commerce.Unlike some of the other laws Trump has turned to as he rebuilds his sweeping tariff regime after the Supreme Court decision earlier this year, this trade law, known as Section 338, does not appear to impose a time limit on the duties. That means tariffs imposed under the law could remain in place indefinitely unless Trump or a future president chooses to remove them.And the potential reach is broad. The Canadian goods targeted in this first round spread far beyond the products at the heart of Trump’s stated grievances, hitting close to 500 items.
For now, Trump has spared many of the goods the US relies on Canada for most, including energy, critical minerals and fish, but that may be subject to change.The U.S. imposed 50% tariffs on some Canadian goods on Saturday after the two longstanding allies failed to reach a trade deal, with each side accusing the other of derailing days of talks.The tariffs that came into effect just after midnight (0400 GMT) on some $20 billion of Canadian goods - things like wooden ice hockey sticks that are rarely used anymore - are far from an economic game-changer for the largest U.S. trading partner after Mexico. That represents just over 5% of Canada’s exports to the U.S.
But the new tariffs mark an increase in tensions between President Donald Trump and Prime Minister Mark Carney, and will likely make broader talks to renew the U.S.-Mexico-Canada free trade agreement more USA difficult.Carney said he had suspended trade negotiations and Canada would retaliate “dollar for dollar” on the new tariffs.
“I have decided to suspend trade negotiations with the U.S. and have directed Canada’s negotiators to return to Ottawa,” Carney said in a statement.“They (negotiators) have worked hard, in good faith, to defend the interests of Canadians throughout these negotiations up until the very last minute,” he said. “However, last-minute changes in the U.S. proposed terms were unfair, USA uneconomic, and called into question the reliability of any deal.”Carney, the only person to ever run the central banks of two major economies, was elected last year on promises to stand up to Trump, and remains broadly popular. Polls show most Canadians oppose making any USA concessions to Trump.Hours earlier, the two sides had seemed close to an agreement that sources said would have lowered tariffs on steel, aluminum and autos and potentially brought American alcohol back to Canadian liquor stores.
“Tonight, Canada declined to finalize the trade deal under the terms agreed earlier this week,” U.S. Trade Representative Jamieson Greer said during a USA White House briefing.“This is a missed opportunity for Canada to partner with the United States, which is the fastest-growing economy in the G7,” Greer said.
A senior Trump administration official said the U.S. offer would have put Canada in the best tariff position of any major exporter to the U.S., but that Canada had sought additional concessions, especially on steel, aluminum, autos and softwood lumber.No additional talks are scheduled as the U.S. implements the new duties, the official said.
Trump last month threatened to impose a raft of duties on a range of Canadian imports including wine, furniture, dairy products, cement, clothing, fishing rods, hockey equipment.The tariffs, which do not qualify for preferential treatment under the U.S.-Mexico-Canada free-trade agreement, open up some already vulnerable sectors to potential severe damage that could lead to job losses and business closures,
USA trade experts have said.But the new tariffs mark an increase in tensions between President Donald Trump and Prime Minister Mark Carney, and will likely make broader talks to renew the U.S.-Mexico-Canada free trade agreement more difficult.
Carney said he had suspended trade negotiations and Canada would retaliate "dollar for dollar" on the new tariffs."I have decided to suspend trade negotiations with the U.S. and have directed Canada’s negotiators to return to Ottawa," Carney said in a statement."They (negotiators) have worked hard, in good faith, to defend the interests of Canadians throughout these negotiations up until the very last minute," he said. "However, last-minute changes in the U.S. proposed terms were unfair, uneconomic, and called into question the reliability of any deal."
The decision by the U.S. administration followed three days of talks in Washington between Canada’s minister for trade with the U.S., Dominic LeBlanc, and Greer.The new duties add to existing U.S. tariffs on steel, lumber and autos which have taken major hit in the last 18 months, although the malaise has been largely contained within these sectors.WASHINGTON/OTTAWA, Aug 22 (Reuters) - The U.S. imposed 50% tariffs on some Canadian goods on Saturday after the two longstanding allies failed to reach a trade deal, with each side accusing the other of derailing days of talks.
The tariffs that came into effect just after midnight (0400 GMT) on some $20 billion of Canadian goods - things like wooden ice hockey sticks that are rarely used anymore - are far from an economic game-changer for the largest U.S. trading partner after Mexico. That represents just over 5% of Canada's exports to the U.S.
Posted on 2026/08/22 02:04 PM