Canada Announces Reciprocal Tariff Response as U.S.-Canada Trade Talks Collapse

A new wave of U.S. tariffs on a wide array of Canadian goods took effect Saturday midnight after last-minute trade talks collapsed, Prime Minister Mark Carney announced the suspension of negotiations ahead of the Friday night deadline, pledging reciprocal tariffs on U.S. goods “dollar for dollar.”

Carney stated that last-minute changes to the U.S. proposal were unfair and uneconomic, raising doubts about the reliability of any agreement.

Trade negotiators had been engaged in intense talks since July, following former President Donald Trump’s threat to impose a 50% levy on nearly $20 billion (C$28 billion) of Canadian imports by August 19.

Trump had temporarily paused those tariffs earlier in the week, claiming the two sides were close to a “very good” deal for both countries.

But minutes before the deadline, Carney said while “important progress” had been made, it wasn’t enough to meet Canada’s objectives for its citizens.

In response, Carney directed negotiators to return to Ottawa and suspended further talks with the U.S.

Shortly after, U.S. Trade Representative Jamieson Greer stated in a post on X that Canada had declined to finalize the deal under terms agreed earlier in the week.

Despite the U.S. offering Canada the best treatment of any major exporter to its market, new demands and walkbacks by Canada upset the careful balance reached in recent days, the statement read.

The breakdown marks a significant shift in tone from earlier in the week, when both U.S. and Canadian officials expressed optimism that a beneficial deal was within reach.

Negotiators were reportedly discussing a deal that would reduce U.S. 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 restore U.S. alcohol to store shelves.

Tensions between the two major trading partners have been simmering since Trump returned to office in January of last year, unleashing a wide-ranging global tariff program that has upended decades of free trade between Canada and the U.S.

Now that talks have collapsed, Canada will face new 50% U.S. tariffs imposed using the Depression-era Tariff Act of 1930, applied to a range of goods including wine, dairy, cement, clothing, and hockey equipment.

These tariffs are in addition to existing U.S. tariffs on Canadian steel, aluminium, autos, and lumber.

Doug Ford, the outspoken premier of Ontario, said he gives the prime minister “full support for a strong response—tariff for tariff, dollar for dollar”—following Carney’s announcement.

Canada has been engaged in on-again, off-again trade negotiations with the U.S. for over a year, seeking a deal that would see the U.S. drop or reduce tariffs on these key sectors.

The U.S., meanwhile, has been asking for several concessions from Canada, including removing remaining retaliatory tariffs on American autos and adjusting dairy quotas to allow greater access for U.S. cheese producers.

It has also asked for the ban on U.S. alcohol sales—imposed last year by most Canadian provinces in retaliation to Trump’s tariffs—to be removed.

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

The U.S. Chamber of Commerce said earlier in the week that “higher tariffs would damage both economies, drive up costs for U.S. families, further disrupt critical supply chains, and risk the 13 million American jobs that depend on trade under the U.S.-Mexico-Canada Agreement”.

A recent poll by Canadian firm Abacus Data suggested that around 36% of Canadians would support retaliating to U.S. tariffs, while another 30% would want the Carney government to continue negotiating.

Retaliation risks upsetting the Trump administration, with trade representative Jamieson Greer saying the U.S. is “not going to tolerate” counter-tariffs. “We’ll take action,” he told reporters last week.

Source link