The United States began enforcing 50 percent tariffs on roughly $20 billion worth of Canadian goods early Saturday after last-minute trade talks between the two countries collapsed, and Canadian Prime Minister Mark Carney said Ottawa will respond with matching tariffs starting September 8.
How the Talks Fell Apart
The new US duties took effect at 12:01 am Eastern time Saturday, after negotiators failed to reach a deal by President Donald Trump’s midnight deadline. The breakdown came just days after Trump had paused the tariffs for three days on Tuesday, writing on social media that the two countries “have a DEAL!”
US Trade Representative Jamieson Greer said in a statement that Canada had declined to finalise a deal under terms agreed earlier in the week, one that he said included significant tariff reductions on steel, aluminium, autos and lumber alongside a broader economic and security partnership.
“Despite the US offer to Canada to receive the best treatment of any major exporter to our market, new demands and walkbacks of other commitments by Canada have upended the careful balance reached in the past days,” Greer said.
Carney’s Response
Carney offered a different account of the breakdown, saying at a news conference in Ottawa that Canada had proposed dropping its own retaliatory tariffs on US steel, aluminium and autos if Washington substantially lowered its tariffs, and had offered to encourage provinces to restore sales of US alcohol.
He said the US did not agree to what he called sensible economic terms for core industries including the automotive sector, and that Canada would not give the US “exclusive access” to its critical minerals.
“In recent days, the United States proposed new terms that were uneconomic, unfair, and undermined the net benefits for Canada, and called into question the reliability of any deal,” Carney said. “In short, they asked too much, and they offered too little.” He described the new US tariffs as “a miscalculation,” adding that Canadians would take care of each other and stay united in response.
What the Tariffs Cover
The new US duties were imposed under Section 338 of the Tariff Act of 1930, a provision allowing tariffs of up to 50 percent on countries found to be discriminating against US goods, and one that had not been invoked since 1949.
Unlike earlier rounds of tariffs, the White House said there would be no exemptions for goods covered under the US-Mexico-Canada Agreement, though it confirmed exemptions for energy products, potash, fish, critical minerals, and goods already covered under separate Section 232 tariffs.
The duties affect around 5 percent of Canadian exports to the US, according to Al Jazeera, and cover a wide range of goods including motor vehicles, alcohol, agricultural products, textiles, cosmetics, furniture, electronics, machinery, diamonds and toys, on top of existing US tariffs on Canadian steel, aluminium and lumber.
Carney said Canada’s retaliatory measures, set to begin September 8, will target US steel, dairy, appliances, agricultural equipment, pulp, paper and electronics, with further details expected in the coming days.
Reaction on Both Sides
Ontario Premier Doug Ford backed Carney’s decision to suspend negotiations, saying Canada needed to respond forcefully. In Washington, Greer told Fox News there were no new trade talks planned with Canada. “They’ve always had the best deal, and they still would have an even better deal, but they didn’t want that,” he said.
Business Roundtable CEO Joshua Bolten, representing major US companies, said in a statement that while the group appreciated the Trump administration’s focus on addressing barriers facing American exporters, the new tariffs and Canada’s retaliation risked raising costs for American businesses and families and straining the broader US-Canada economic relationship.
The failure to reach a deal adds to tension already present in the relationship after the trilateral USMCA pact was not renewed in July amid US concerns over trade deficits.
What Happens Next
With Canada’s countermeasures not due to take effect until September 8, there is a window in which either side could still return to the negotiating table, though officials on both sides signalled little appetite for renewed talks as of Saturday. Legal challenges to the new US tariffs are also considered likely, given the unusual legal basis being used to impose them.
