Trump's Canada trade deal collapses as Carney vows to meet US ‘dollar for dollar’ on tariffs

WASHINGTON, DC: President Donald Trump’s trade negotiations with Canada collapsed on Friday, August 21, triggering new 50% US tariffs on roughly $20 billion worth of Canadian imports.

Canadian Prime Minister Mark Carney suspended the trade talks, stating that the final changes proposed by Washington were unacceptable, while the United States said Ottawa had backed away from commitments reached earlier in the week. 

Last-minute talks fail as 50% US tariffs take effect

The collapse came after weeks of negotiations over tariffs on Canadian goods, with the two sides appearing close to a deal earlier this week after Trump temporarily paused the new tariffs and said negotiations were progressing toward an agreement.

Canadian officials continued negotiating with US Trade Representative Jamieson Greer through Friday night, but the talks failed to produce a final agreement before the deadline. 

Carney said there had been “important progress” but that it was “not enough to meet our objectives for Canadians.” “As a result, this evening, I have decided to suspend trade negotiations with the US and have directed Canada’s negotiators to return to Ottawa,” he said.

The Canadian prime minister also objected to changes made by Washington during the final stage of negotiations. “Last-minute changes in the US proposed terms were unfair, uneconomic, and called into question the reliability of any deal,” he remarked.

The US offered a different account. Greer said Canada had declined to finalize an agreement under terms that had been negotiated earlier in the week.

“Despite the US offer to Canada to receive the best treatment of any major exporter to our market, new demands and walk backs of other commitments by Canada have upended the careful balance reached in the past days,” Greer said.

The resulting tariffs will take effect at midnight on Saturday under Section 338 of the Tariff Act of 1930. The duties apply to a range of Canadian products, including hockey equipment, some building materials, liquor and certain clothing, and come on top of existing US tariffs on Canadian steel, aluminum, autos and lumber.

Canada vows matching tariffs as trade tensions escalate

Carney said Canada would respond immediately to the new US duties. “Canada will match those tariffs dollar for dollar to protect our workers and businesses,” he said.

Canadian provinces had faced pressure over measures imposed in response to earlier Trump tariffs, including restrictions on US goods. Greer said Canada’s decision to maintain those retaliatory measures further contributed to the collapse of the negotiations and the latest tariffs.

The US Chamber of Commerce warned that higher tariffs could increase costs for American consumers, disrupt supply chains and put millions of jobs linked to trade under the North American trade pact at risk. The Canadian Chamber of Commerce echoed that statement, calling the latest development “a body blow to North American competitiveness.”

Carney also signaled that the country would not return to its previous trading relationship with the US. “We have recognised from the beginning that America has changed, and that we will not return to our old relationship,” he said.