Canada and U.S. Trade Tensions Flare as Negotiations Collapse

Even by Trump administration standards, the week was tumultuous. On Tuesday, President Trump announced a trade deal with Canada had been reached. Late Friday night, Prime Minister Mark Carney blamed last‑minute U.S. demands, ordering his negotiators to walk away and return to Ottawa.

Now Canada and the United States, once steadfast free‑trade partners, find themselves in a high‑stakes trade war that sharpened overnight. Washington has levied 50 % tariffs on roughly $20 billion of Canadian goods. Mr. Carney pledged to match those tariffs dollar for dollar.

This week’s turmoil in Washington echoes the 1989 negotiations that created the Canada‑U.S. Free Trade Agreement and reshaped Canada’s economy.

Early in my career I was dispatched by Maclean’s, then a weekly newsmagazine, to cover the Washington talks that began in 1986.

Back then the situation was markedly different. The initiative originated in Canada, and Prime Minister Brian Mulroney enjoyed a close rapport with President Ronald Reagan — a relationship comparable to that later shared by Prime Minister Justin Trudeau and President Barack Obama.

Ontario’s recent television ads aired in the United States reminded viewers that Reagan was also a champion of free trade.

Crucially, the 1980s talks faced no looming threat akin to the sweeping 50 % tariffs Trump imposed after his July threats. Had those negotiations collapsed, there would have been no dire economic fallout.

Today, Janice Charette, a retired public servant serving as Canada’s chief negotiator, remains silent whenever she enters or leaves the Office of the United States Trade Representative, whose façade has barely changed since the 1980s.

This contrasts sharply with Simon Reisman, Canada’s negotiator in the 1980s — also a retired public servant recalled to duty. Reisman often sparred with reporters, myself included, who gathered like pigeons outside the trade office. Famously, he labelled The Toronto Star — then openly opposing free trade — a “rag,” stalked off, then turned back to jab a finger at its correspondent and declare, “You are a hack!”

Many of the contentious issues from that era persist: softwood lumber, automobiles, Canada’s supply‑managed dairy system, and provincial liquor stores that discriminate against U.S. products. The media angle has flipped as well: earlier the United States complained that Canadian cable operators carried American TV signals without payment; now Canada seeks compensation from American tech giants for using Canadian media.

The overriding obstacle then, as now, was Canada’s demand for an independent, binding dispute‑settlement mechanism. Even then, softwood‑lumber tariffs — driven by American claims that Canada’s forestry practices constituted an unfair subsidy — remained a major irritant.

The United States refused to suspend its domestic trade laws that produced those lumber tariffs, but Canada continued to advocate for an additional framework that would hold either side accountable for violating the agreement.

U.S. officials argued that subjecting the federal government to an independent body would be unconstitutional and unlikely to win congressional approval.

On September 23, 1987, Reisman declared the talks dead after 16 months, asserting that the Americans had failed to “belly up to the bar.”

Yet a deadline loomed. Unlike the Trump administration, the Reagan White House respected Congress’s authority over trade, and its negotiating mandate with Canada expired on October 4.

On October 1, Mulroney dispatched a team to meet with Treasury Secretary James Baker — whom he called Washington’s “go‑to guy” — joined by U.S. Trade Representative Clayton Yeutter.

Suddenly a deal seemed within reach.

But late on the evening of October 3, Mulroney noted that the Canadian delegation called from the Treasury building to say the negotiations had collapsed again. Shortly after hanging up, Baker entered the room, slammed a paper on the table and said, “All right, you can have your goddamn dispute‑settlement mechanism.” Finance Minister Michael Wilson gave a thumbs‑up to journalists waiting outside.

The following morning — a Sunday — I skipped my planned bike ride and joined fellow reporters in the Treasury building’s gilded hall for a more formal announcement.

The breakdown of talks was merely a step toward free trade. The subsequent Canadian federal election became a de facto referendum on the issue, with the implementing legislation stalled in the Liberal‑controlled Senate.

Although the Friday negotiations ended without agreement, Mr. Carney said the talks are only suspended, leaving open the possibility of renewal, as occurred in 1987. Should they not resume, another round of discussions over the future of the Canada‑United States‑Mexico Agreement is likely.

Ian Austen covers Canada for The Times. A Windsor, Ontario native now based in Ottawa, he has reported on the country for two decades. He can be reached at austen@nytimes.com.

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