New U.S. tariffs on a wide array of Canadian goods have taken effect after trade talks between the two nations broke down late Friday. Canadian Prime Minister Mark Carney announced the suspension of negotiations shortly before the deadline, stating that Canada would impose reciprocal tariffs on U.S. goods "dollar for dollar."
Carney cited "last-minute changes in the U.S. proposed terms" as unfair, uneconomic, and questioning the reliability of any potential deal. Trade negotiators had been in intensive discussions since July, following President Donald Trump's threat to impose a 50% levy on nearly $20 billion (C$28 billion) of Canadian imports by August 19.
Earlier in the week, Trump had temporarily paused those tariffs, expressing optimism that a deal was close. However, minutes before a deadline, Carney declared that while "important progress" had been made, it was insufficient to meet Canadian objectives. He directed negotiators to return to Ottawa, emphasizing that the U.S. proposals were unacceptable.
In response, U.S. trade representative Jamieson Greer stated that Canada declined to finalize the deal under previously agreed terms. Greer added that "new demands and walk backs of other commitments by Canada have upended the careful balance reached in the past days," despite a U.S. offer for Canada to receive preferential treatment.
This breakdown marks a significant shift from the earlier optimism expressed by both U.S. and Canadian officials regarding a mutually beneficial trade agreement.
The emerging tariffs, imposed by the U.S. under the Tariff Act of 1930, will apply to goods including wine, dairy, cement, clothing, and hockey equipment. These are in addition to existing U.S. tariffs on Canadian steel, aluminum, autos, and lumber.
Negotiators had reportedly been discussing a reduction in U.S. tariffs on Canadian steel and aluminum from 50% to 25%, and on Canadian autos from 25% to 15%. In exchange, Canada was reportedly asked to allow U.S. alcohol back onto store shelves and to adjust its dairy quotas for greater U.S. cheese access. Canada had also been seeking the removal of existing U.S. tariffs on key sectors.
Tensions between the two trading partners have escalated since President Trump took office, disrupting decades of free trade. Businesses and stakeholders on both sides of the border had urged a resolution, with the U.S. Chamber of Commerce warning that higher tariffs would harm both economies, increase costs for American families, disrupt supply chains, and jeopardize American jobs dependent on trade.
Polls in Canada indicated a divided public response, with a portion supporting retaliation and another preferring continued negotiation. U.S. officials, however, had previously stated they would "not tolerate" counter-tariffs.