RESOLVING THE LEDGER
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See the full story · 8 sourcesLast-minute negotiations failed to halt the tariffs, which will hit $20 billion of Canadian products
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Canada has vowed to match 50 per cent U.S. tariffs on Canadian products “dollar for dollar” as Donald Trump ’s import taxes come into force.
The tariffs, on $20 billion worth of Canadian products, came into force early Saturday after last-minute negotiations failed.
Trump’s tariffs will hit about 5 per cent of what Canada ships to the U.S. every year.
The goods affected range from hockey sticks to tongue depressors.
Canadian Prime Minister Mark Carney immediately promised to retaliate, saying: “Canada will match those tariffs dollar for dollar to protect our workers and businesses.”
Canada sought concessions on steel, aluminium, lumber and cars, but the U.S. was unwilling to provide those, a senior official in the Trump administration said.
“Tonight, Canada declined to finalize the trade deal under the terms agreed earlier this week,” U.S. Trade Representative Jamieson Greer said shortly before midnight.
“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.”
Carney blamed Washington for the breakdown, saying that “last-minute changes in the U.S. proposed terms were unfair, uneconomic, and called into question the reliability of any deal.”
He said that he had suspended negotiations and told Canada’s negotiating team to return to Ottawa.
He added that his government would announce additional support for Canadian workers and businesses in the coming days.
Greer said that the U.S. offer was “forward-looking” and included “a historic economic and national security partnership.”
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.
Carney said Canada’s goal throughout the negotiations had been to secure the best possible agreement, “never a deal at any price or on any deadline.”
The political impact will likely be even bigger than the economic fallout. The countries sold each other $880 billion worth of goods and services in 2025.
The tariffs were initially supposed to kick in at 12.01 a.m. Wednesday. Trump extended the deadline for three days to allow talks to continue, but the two countries still could not reach an agreement in time.
Trump’s approach to dealing with Canada marks an extraordinary departure from the traditionally cooperative relationship between the two countries. Trump has also made repeated inflammatory comments about turning Canada into America’s 51st state .
Carney said Canada had recognized that “America has changed” and that the two countries would “not return to our old relationship.”
A petition to expel the U.S. ambassador , a Trump ally, from Canada has collected nearly 248,000 signatures since July 21. It accuses Ambassador Pete Hoekstra of having “normalized’’ Trump’s talk of annexing Canada, among other things.
Nearly 72 per cent of Canada’s goods exports went to the United States in 2025.
Candace Laing, president and CEO of the Canadian Chamber of Commerce, called the tariffs “a body blow to North American competitiveness,” warning they would raise costs for Americans while threatening Canadian customers, investment and small businesses.
Trump has made tariffs the centerpiece of his second-term economic agenda. In 2025, he imposed double-digit import taxes on almost every country, justifying them by declaring the longstanding U.S. trade deficit a national emergency. The Supreme Court in February ruled that he had overstepped his authority , striking down those tariffs and setting the stage for the federal government to pay refunds to importers.
Moving forward, Trump has looked for other legal authority to justify tariffs.
To hit Canada, he reached back to the Great Depression, invoking Section 338 of the Tariff Act of 1930 to threaten 50 per cent tariffs on products that account for about 5 per cent of Canadian exports to the United States.
Nearly a century ago, with the U.S. and world economies in collapse, Congress passed the 1930 tariff law, imposing taxes on imports from around the world. Known as the Smoot-Hawley tariffs after their congressional sponsors, they are notorious among economists and historians for limiting world commerce and making the Great Depression worse.
Section 338, which has never been used before to impose tariffs, authorizes the president to slap import taxes of up to 50 per cent on imports from countries that have discriminated against U.S. businesses.
No investigation is required to justify the levies. Nor is there any limit on how long they can stay in place.
The rift comes as the United States, Mexico and Canada are trying to renew a trade agreement that Trump negotiated in his first term and once praised as a triumph. The United States has begun formal talks with Mexico over revamping the US-Mexico-Canada Agreement (USMCA). But talks with Canada have not begun.
“Canada told the Americans in advance that if these tariffs landed, it would stop negotiating and retaliate,'' said Barry Appleton, senior fellow at the Center for International Law at New York Law School.
“The American trade representative said publicly he would not tolerate retaliation. Both sides have now committed themselves in public, which is how escalation stops being a choice.''
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