US imposes 50% tariffs on Canadian goods as trade talks break down

The United States imposed 50% tariffs on $20 billion worth of Canadian products on Saturday morning, and Canada immediately pledged to retaliate, after last-ditch negotiations failed to resolve the latest strain in already tense relations between the historic allies.

President Donald Trump’s import taxes will hit about 5% of what Canada ships to the United States every year, including products ranging from hockey sticks to tongue depressors.

“Canada will match those tariffs dollar for dollar to protect our workers and businesses,” Canadian Prime Minister Mark Carney said in a statement.

The retaliation escalates the trade conflict and calls into question the future of a North American trade pact between the United States, Canada and Mexico that is crucial to industry in all three countries.

Mark Carney said he ‘recognised’ that ‘America has changed’ and the two countries ‘will not return to their old relationship’. / Credit: AP

Canada sought concessions on Trump tariffs on steel, aluminium, autos and lumber that the United States was unwilling to provide, a senior Trump administration official told reporters.

“Tonight, Canada declined to finalise the trade deal under the terms agreed earlier this week. Despite the US 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,” US Trade Representative Jamieson Greer said in a statement read to reporters on a press call shortly before midnight.

Carney blamed Washington for the breakdown, saying “last-minute changes in the US proposed terms were unfair, uneconomic, and called into question the reliability of any deal.” He said he had suspended negotiations and directed Canada’s negotiating team to return to Ottawa.

Carney said his government would announce additional support for Canadian workers and businesses in the coming days.

No further talks have been planned. The breakdown in negotiations marked a sharp reversal from two days earlier, when officials from the two countries sounded as if they were headed toward a compromise.

The tariffs were initially supposed to kick in on Wednesday, August 19. But Trump extended the deadline for three days to allow talks to continue, but the two countries still could not reach an agreement in time.

The political impact will likely be even bigger than the economic fallout. The countries sold each other $880 billion (£645 billion) worth of goods and services last year.

Trump’s approach to dealing with Canada marks an extraordinary departure from the traditionally cooperative relationship between the two countries. Trump has hit Canadian goods with tariffs in a push to bring manufacturing back to the United States, and has repeatedly made inflammatory comments about turning Canada into America’s 51st state.

Carney said Canada had recognised that “America has changed” and that the two countries would “not return to our old relationship.”

President Trump announced new tariffs on 60 countries, including the UK, in July / Credit: AP

But the two countries had good reasons to find a compromise.

Nearly 72% of Canada’s goods exports last year went to the United States. And the Trump administration might be wary of imposing a hefty new tariff, paid by US importers who try to pass along the cost to consumers via higher prices, ahead of November’s midterm elections. American voters are already frustrated with the high cost of living.

Trump has made tariffs the centrepiece of his second-term economic agenda. Last year, he imposed double-digit import taxes on almost every country, justifying them by declaring the longstanding US trade deficit a national emergency.