Canada to match US tariffs 'dollar for dollar' as trade talks collapse

A fresh wave of US tariffs on a wide array of Canadian goods came into effect on Saturday after trade talks between the two countries broke down at the last minute.

Negotiations suspended

Canadian Prime Minister Mark Carney announced shortly before Friday night's deadline that he was suspending the negotiations. He said "important progress" had been made, but that it was "not enough to meet our objectives for Canadians", and directed negotiators to return to Ottawa.

"Last-minute changes in the US proposed terms were unfair, uneconomic, and called into question the reliability of any deal," Carney said. He added that Canada would impose reciprocal tariffs on US goods "dollar for dollar".

What was on the table

Trade negotiators had been engaged in intense talks since July, after President Donald Trump threatened to impose a 50% levy on nearly $20bn (C$28bn; £14bn) of Canadian imports by 19 August. Trump temporarily paused those tariffs earlier in the week, saying the two sides were close to signing a trade deal that was "very good" for both countries.

Negotiators were reportedly discussing a deal that would reduce US tariffs on Canadian steel and aluminium from 50% to 25%, and on Canadian autos from 25% to 15%. In exchange, Carney had asked Canadian provinces to restore US alcohol to store shelves.

Washington's response

US trade representative Jamieson Greer said that "Canada declined to finalise the trade deal under the terms agreed earlier this week". He argued that "new demands and walk backs of other commitments by Canada have upended the careful balance reached in the past days".

Why it matters

The breakdown marks a sharp reversal from earlier in the week, when officials on both sides sounded optimistic that a deal beneficial to both countries was within reach. It puts the US-Canada relationship in uncharted territory and will be a major test for Carney's premiership: roughly 70% of Canadian exports go south, making the two economies among the most deeply integrated in the world.