US and Canada cannot agree on tariffs, trade conflict deepens

World Politics

Mark Carney, shown with Donald Trump at the White House in 2025, says Canada will copy the United States’ tariffs. (AP: Adrian Wyld/The Canadian Press, File)

In short:

The United States has placed 50 percent tariffs on some Canadian products after the two long‑time allies failed to reach a trade agreement.

Both sides say the other side stopped the talks.

What’s next?

Canada’s Prime Minister Mark Carney says his country will respond “dollar for dollar” to the new tariffs.

The United States has added 50 percent tariffs on $US20 billion ($27.9 billion) of Canadian goods and Canada says it will fight back.

Last‑minute talks could not fix the newest tension in already strained relations between the historic allies.

President Donald Trump’s import taxes will affect about 5 percent of what Canada ships to the United States each year, from hockey sticks to tongue depressors.

The White House says the tariffs will start in 30 days, leaving time for more talks.

Canada’s Prime Minister Mark Carney said his nation would match the U.S. tariffs dollar for dollar, raising the trade fight and putting the future of a North American trade pact with the United States, Canada and Mexico in doubt, a pact that is vital for industry in all three nations.

Canada wanted lower tariffs on steel, aluminium, cars and lumber, which the United States would not give.

U.S. trade representative Jamieson Greer said early Saturday local time: “Tonight, Canada refused to finish the trade deal under the terms agreed earlier this week.”

“Even though the United States offered Canada the best treatment of any major exporter to our market, new demands and back‑tracking on other promises by Canada have upset the careful balance reached in the past days,” the statement read.

Mr Carney replied: “Last‑minute changes in the U.S. proposed terms were unfair, uneconomic, and raised doubts about the reliability of any deal.”

He said his government would announce more help for Canadian workers and businesses in the next few days.

Mr Greer said the U.S. offer was “forward‑looking” and included a “historic economic and national‑security partnership.”

No more talks have been scheduled.

The collapse of talks marked a sharp turn from two days earlier, when officials from both countries sounded close to a compromise.

Usually cooperative alliance goes sour

The political impact will likely be larger than the economic damage. The two countries bought each other $US880 billion worth of goods and services last year.

The tariffs were supposed to start at 12:01 a.m. on Wednesday.

Donald Trump said on Friday he expected the United States to reach a trade deal with Canada. (AP: Manuel Balce Ceneta)

Mr Trump gave a three‑day extension to keep talks going, but the two nations still could not finish an agreement in time.

The two countries have argued for decades over trade, picking fights over Canadian softwood lumber imports and U.S. access to Canada’s protected dairy market.

Still, they have managed to stay friends, allies and trading partners.

Mr Trump’s way of dealing with Canada is a big change from the normally cooperative relationship between the two nations.

He has hit Canadian goods with tariffs to push manufacturing back to the United States and has repeatedly made heated comments about turning Canada into America’s 51st state.

Canadians and Americans are frustrated

The Canadian public is fed up.

A petition to expel the U.S. ambassador, a Trump ally, has gathered almost 248,000 signatures since July 21. It accuses Ambassador Pete Hoekstra of “normalising” Mr Trump’s talk of annexing Canada, among other things.

Both countries had good reasons to find a compromise.

Donald Trump’s import taxes will affect about 5 percent of what Canada ships to the United States each year. (AP: Mark Schiefelbein)

Nearly 72 percent of Canada’s goods exports last year went to the United States.

The Trump administration may be careful about adding a heavy new tariff that U.S. importers would pass on to shoppers as higher prices, especially before the November mid‑term elections.

American voters are already upset about the high cost of living.

“Canada probably wanted more sector‑specific relief than the United States was ready to give, or Canada’s concessions did not go far enough,” said Ryan Majerus, a partner at King & Spalding and former U.S. trade official.

Fears that wildfire smoke could disrupt the World Cup final remain, as U.S. President Donald Trump threatens Canada with tariffs.

“Either way, I think both sides will feel huge pressure in the coming days to still find a way out. But if Canada also imposes tariffs, the exit may be even harder to find.”

Candace Laing, president and CEO of the Canadian Chamber of Commerce, called the tariffs “a body blow to North American competitiveness,” warning they would raise costs for Americans while threatening Canadian customers, investment and small businesses.

The split comes as the United States, Mexico and Canada try to renew a trade agreement that Mr Trump negotiated in his first term and once praised as a triumph.

The United States has started formal talks with Mexico to revamp the US‑Mexico‑Canada Agreement (USMCA). But talks with Canada have not started, and the growing trade fight casts doubt on whether they will happen.

“Canada told the Americans ahead of time that if these tariffs landed, it would stop negotiating and fight back,” said Barry Appleton, senior fellow at the Center for International Law at New York Law School.

“The American trade representative said publicly he would not tolerate retaliation. Both sides have now spoken publicly, which is how escalation stops being a choice.”

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