The United States and Canada have failed to reach a new trade agreement, with Washington moving ahead with 50% tariffs on about $20 billion worth of Canadian imports and Ottawa promising to respond with matching measures.
The new US tariffs, imposed under Section 338, were due to take effect shortly after midnight, according to a senior US administration official. The measures add to existing American duties on Canadian steel, lumber and automobiles, which have already placed pressure on Canada’s economy and trade relationship with its largest trading partner.
Canadian Prime Minister Mark Carney announced the suspension of negotiations after three days of talks in Washington between Canada’s trade minister Dominic LeBlanc and US Trade Representative Jamieson Greer.
Carney said Canadian negotiators had worked in good faith to protect the country’s interests but that changes proposed by Washington at the last minute were unacceptable.
He said the changes were “unfair” and “uneconomic” and raised concerns about the reliability of any future agreement.
Carney also pledged that Canada would respond to the new US duties “dollar for dollar”, putting the two countries on course for another escalation in their trade dispute.
The latest tariffs affect a relatively small portion of Canada’s exports, but they could add to economic pressure created by earlier US duties. Canadian businesses have already faced higher costs, job losses and uncertainty as the trade conflict has disrupted the long-standing economic relationship between the neighbouring countries.
The new duties will apply even to Canadian products that qualify for preferential treatment under the US-Mexico-Canada Agreement, potentially exposing more businesses to additional costs.
The breakdown came after President Donald Trump had postponed the planned tariffs earlier in the week, saying negotiations were making significant progress. Trump had also said he believed Washington should be able to reach an agreement with Canada, pointing to his relationship with Carney.
One major disagreement has involved Canada’s restrictions on US alcohol and wine sales. Carney asked provinces to restore American alcohol products to store shelves, but several provincial leaders expressed reservations.
Quebec Premier Christine Frechette said she wanted to examine the proposed agreement before making a decision, while Manitoba Premier Wab Kinew urged Canada to take a firm position.
Ontario Premier Doug Ford, who controls one of Canada’s largest alcohol purchasing systems, has remained relatively quiet on the latest development.
Carney has repeatedly warned that Canada’s relationship with the US has changed permanently. He has called for greater diversification of Canadian trade to reduce dependence on the American market, which currently accounts for about 70% of Canada’s exports.
The two countries have also yet to agree on revisions to the USMCA, leaving uncertainty over the future of North American trade.
