Canada said it would answer new United States tariffs with matching measures after last-minute trade negotiations collapsed, marking a sharp escalation in a dispute between two closely linked economies.
A fresh 50% US levy on about $20bn of Canadian imports came into force following the breakdown of talks. Canadian Prime Minister Mark Carney announced shortly before a Friday night deadline that he was suspending negotiations and bringing Canadian negotiators back to Ottawa.
Carney said the two sides had made “important progress”, but not enough to meet Canada’s objectives. He said late changes in the US proposal were “unfair, uneconomic” and raised doubts about whether any agreement could be relied upon. He also said Canada would impose reciprocal tariffs on US goods “dollar for dollar”.
The US offered a different account of the failed negotiations. US trade representative Jamieson Greer said Canada had declined to complete a deal under terms that had been agreed earlier in the week. Greer said Washington had offered Canada the best treatment of any major exporter to the US market, but that new Canadian demands and reversals had disrupted the balance reached during the talks.
The immediate dispute followed months of negotiations that had intensified after President Donald Trump threatened in July to impose a 50% levy on nearly $20bn in Canadian imports by 19 August. Trump had temporarily paused the tariffs earlier in the week, saying the countries were close to an agreement he described as very good for both sides.
According to the account cited in the evidence, negotiators had been discussing possible reductions in 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 return US alcohol to store shelves.
The new US tariffs were imposed under the Tariff Act of 1930 and apply to a range of goods representing about 5% of Canadian exports, including wine, dairy, cement, clothing and hockey equipment. They come on top of existing US tariffs on Canadian steel and aluminium, autos and lumber.
The dispute carries wider economic stakes because Canada and the US have one of the world’s most integrated trading relationships. Canada sends approximately 70% of its exports to the United States, making the country highly exposed to changes in US trade policy.
Business groups warned that the measures would hurt companies on both sides of the border. The Canadian Chamber of Commerce called the tariffs a major blow to North American competitiveness, and its president, Candace Laing, said small exporters would face difficult choices over orders, payroll and staffing.
Economic estimates cited in the evidence suggested Canada could lose 90,000 jobs if the tariffs were implemented. Financial analysts projected that the 50% levies could reduce Canadian GDP by 0.3% to 0.6%.
Canadian provincial leaders signalled support for retaliation. Ontario Premier Doug Ford backed a strong “tariff for tariff, dollar for dollar” response. British Columbia Premier David Eby said Canada had not sought the fight but would continue resisting. Ontario, Quebec and British Columbia were identified as especially exposed to the dispute.
