Canada has threatened to respond to new US tariffs with matching measures after last-minute trade negotiations between the two countries broke down.
Canadian Prime Minister Mark Carney announced the suspension of the talks shortly before a Friday deadline, saying the latest US proposals were unfair and did not meet Canada’s objectives.
Carney said Canada would impose reciprocal tariffs on American goods “dollar for dollar”, signalling a tougher response to the latest escalation in the trade dispute.
The breakdown came after weeks of negotiations between Canadian and US officials. The talks had appeared to be making progress earlier in the week, with US President Donald Trump saying the two countries were close to reaching a deal.
Trump had threatened a 50% tariff on almost $20bn worth of Canadian imports. The tariffs came into effect on Saturday after the negotiations failed to produce an agreement.
Carney said Canada had made significant progress during the discussions but ultimately decided that the proposed terms were not acceptable.
“Last-minute changes in the US proposed terms were unfair, uneconomic, and called into question the reliability of any deal,” he said.
US Trade Representative Jamieson Greer, however, blamed Canada for the collapse, saying Ottawa had introduced new demands and backed away from commitments that had been discussed during the negotiations.
Under proposals reportedly being considered, US tariffs on Canadian steel and aluminium could have been reduced from 50% to 25%, while tariffs on Canadian automobiles could have fallen from 25% to 15%.
In return, Canada was being asked to make several concessions, including allowing US alcohol products back onto store shelves and providing greater access to its dairy market for American producers.
The collapse of the talks has raised concerns about the future of one of the world’s most closely connected trading relationships.
Canada sends roughly 70% of its exports to the United States, meaning Canadian businesses are particularly exposed to changes in US trade policy.
The new 50% tariffs will affect a range of Canadian products, including wine, dairy, cement, clothing and hockey equipment. They come on top of existing US tariffs on Canadian steel, aluminium, automobiles and lumber.
Canadian business groups have warned that the tariffs could significantly increase costs and hurt companies on both sides of the border.
The Canadian Chamber of Commerce described the new measures as a major blow to North American competitiveness.
Ontario Premier Doug Ford has backed Carney’s response, saying Canada should retaliate with “tariff for tariff, dollar for dollar”.
Other provincial leaders have also expressed support for a strong response, while warning that prolonged trade tensions could damage Canadian jobs and economic growth.
Analysts have estimated that the new tariffs could reduce Canada’s GDP by between 0.3% and 0.6%. One economic analysis has also estimated that as many as 90,000 Canadian jobs could be at risk if the tariffs remain in place.
The dispute has been developing since Trump returned to the White House and introduced a wide-ranging tariff programme affecting trading partners around the world.
For Canada, the latest breakdown represents a significant setback in efforts to secure an agreement that would reduce the impact of US tariffs while maintaining the country’s crucial economic relationship with its largest trading partner.
