The United States and Canada failed to reach a deal Friday that would have averted 50% levies President Donald Trump promised last month, further souring the trade relationship between two of North America’s largest economies.
The news comes after a month of negotiations between the two trading partners following Trump’s order for 50% tariffs on $20 billion worth of Canada imports, including raw agricultural and natural materials, chemicals, textiles, consumer goods, wood products, paper, machinery and tools.
“In recent weeks, we made important progress toward improving Canada’s position as having the best deal in the world with the U.S. However, that progress has not been enough to meet our objectives for Canadians,” Canada Prime Minister Mark Carney said in a statement Friday. “As a result, this evening, I have decided to suspend trade negotiations with the U.S. and have directed Canada’s negotiators to return to Ottawa.”
Carney said he made the decision due to “last-minute changes” the U.S. proposed that “were unfair, uneconomic, and called into question the reliability of any deal.” Meanwhile, the U.S. blamed Canada for the breakdown.
“Despite the U.S. 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,” the Office of the U.S. Trade Representative said in a statement on X, stating that the U.S. offered “significant tariff reductions” for steel, aluminum, automobile and lumber imports.
With both sides returning to their respective corners, the 50% tariffs Trump ordered last month and later temporarily delayed have now gone into effect. Carney said Friday that Canada would “match those tariffs dollar for dollar” and introduce additional measures in the coming days.
In a speech Saturday, Carney said the retaliatory tariffs would go into effect on Sept. 8. Although he did not outline specific duty rates, he said the levies would be be concentrated in sectors such as steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics. Canada has previously installed retaliatory tariffs on a range of U.S. goods, including steel, aluminum and cars.
This latest development further complicates the future of the trade relationship between the U.S. and Canada.
The two countries, along with Mexico, have entered into an up-to-10-year annual review process for the United States-Mexico-Canada Agreement after the U.S. declined to extend the trilateral free trade agreement last month.
Mexico and the U.S. have already held formal bilateral discussions, both before and after last month’s decision, but Canada and the U.S. have made less progress, with Friday’s news adding another hurdle to negotiations over the pact’s future.
“I still expect the United States and Canada to reach an agreement. Their economies are simply too integrated for prolonged escalation to be attractive to either side,” Pete Mento, managing director of global trade advisory services at Baker Tilly, said in a LinkedIn post. “But the real question isn’t whether these particular tariffs survive. It is whether the eventual settlement restores confidence in the rules governing North American trade.”
Editor’s note: This story has been updated with details from a Saturday speech by Canada Prime Minister Mark Carney.
