The US Canada trade war intensified Saturday after negotiations in Washington collapsed, prompting new tariffs that are expected to lift prices on a range of goods in both countries.
Officials on each side blamed the other for the breakdown of talks late Friday. The United States moved ahead with 50% duties on about $20 billion in Canadian products, and Canada said its countermeasures would take effect Sept. 8.
According to U.S. officials, the new import taxes will touch roughly 5% of Canadian exports to the American market, from sporting goods such as hockey sticks to medical supplies like tongue depressors. Prime Minister Carney said Ottawa would roll out targeted support for sectors exposed to the tariffs, naming steel, dairy, appliances, agricultural machinery, pulp and paper, and electronics.
No further meetings were scheduled. Observers said confidence in the trading relationship has taken an immediate hit.
Carney accused Washington of turning “economic integration” into a tool of pressure and described the tariffs as an “attack,” adding that Canada has the reserves, resilience and plan to respond. Jamieson Greer, the president’s chief trade negotiator, said the United States acted after a year of Canadian retaliation and framed the measures as protecting American workers and supply chains.
US Canada trade war tests a key alliance
Canada cites ‘unacceptable demands’ as US says it offered favorable terms
Carney said Canada had been prepared to drop remaining retaliatory duties on steel, aluminum and autos if the United States substantially eased its own, and would encourage provinces to restore sales of U.S. alcohol. He said the talks fell apart over last-minute American demands that would have narrowed tariff relief for Canadian-made vehicles, constrained Canada’s ability to sign trade deals elsewhere, and weakened protections for language, culture and sovereignty. He called the terms “unacceptable.”
Greer said the administration had offered reductions on steel, autos and lumber, sectors sensitive for Canada, and argued Ottawa rejected a favorable package. With no breakthrough, he said the United States is moving ahead with steps in response to Canada’s actions.
The reversal came just two days after both sides had sounded cautiously optimistic about a compromise. Ontario Premier Doug Ford praised Carney for walking away, warning the proposal would have harmed Ontario’s auto, steel and manufacturing industries and urging a robust response to the U.S. tariffs.
The impasse also clouds the outlook for the broader North American trade framework that underpins industry in the United States, Canada and Mexico.
A typically cooperative alliance goes sour
Analysts expect the political fallout to exceed the near-term economic damage, despite the scale of cross-border commerce. The countries exchanged $880 billion in goods and services last year. The tariffs were slated to begin at 12:01 a.m. Wednesday, but the White House extended the deadline by three days to continue discussions. The delay did not yield a deal.
Trade disputes between the neighbors are not new, with recurring clashes over softwood lumber and access to Canada’s protected dairy market. Even so, the relationship has traditionally remained close. The 5,525-mile border is undefended, and nearly 330,000 people and $2 billion in goods cross each day. Canadian troops served alongside Americans in Afghanistan after 9/11.
Trump’s approach marks a sharp break from the generally cooperative posture of past administrations. He has pursued tariffs as a tool to shift manufacturing to the United States and has made provocative remarks about absorbing Canada as a U.S. state. Carney said Canada has recognized that “America has changed” and that the two countries will not return to their previous relationship.
Canadians and Americans are frustrated
Public frustration has grown. A petition calling for the removal of U.S. Ambassador Pete Hoekstra has gathered nearly 248,000 signatures since July 21, accusing him of normalizing annexation rhetoric.
Both governments faced incentives to settle. Nearly 72% of Canada’s goods exports went to the United States last year. In the U.S., tariffs are paid by importers who often pass costs to consumers, a sensitive issue ahead of November’s midterm elections as voters confront elevated living expenses.
Trade experts said the two sides may still face pressure to find an off-ramp, though reciprocal tariffs could make de-escalation harder. Business groups warned the measures would raise costs for Americans and threaten Canadian customers, investment and small firms, calling the actions a blow to North American competitiveness.
Trump has turned to Depression-era trade penalties
Tariffs are central to Trump’s second-term economic strategy. He previously levied broad, double-digit import taxes by declaring the long-standing U.S. trade deficit a national emergency. In February, the Supreme Court ruled that he exceeded his authority, striking down those penalties and clearing the way for refunds to importers. The administration then sought other legal grounds for new duties.
To target Canada, the White House invoked Section 338 of the Tariff Act of 1930 to set 50% tariffs on products representing about 5% of Canadian shipments to the United States. The Smoot-Hawley-era statute, rarely cited and never before used to impose tariffs, permits duties of up to 50% on countries found to discriminate against U.S. commerce without requiring an investigation or setting a time limit.
The rift unfolds as the United States pursues formal talks with Mexico on potential changes to the US-Mexico-Canada Agreement, known as USMCA. Discussions with Canada have not begun, and the escalating US Canada trade war raises fresh uncertainty about whether they will.