Canada says it will match US tariffs 'dollar for dollar' as trade talks break down

Canada has declared its intention to match US tariffs "dollar for dollar" following the collapse of trade discussions.

A new wave of US tariffs on various Canadian products took effect at midnight on Saturday, after last-minute trade negotiations failed. Canadian Prime Minister Mark Carney announced the suspension of talks just before the Friday night deadline, stating that Canada would impose reciprocal tariffs on US goods, matching them "dollar for dollar."

Carney explained that "last-minute changes in the US proposed terms were unfair, uneconomic, and called into question the reliability of any deal."

Trade negotiators had been engaged in intensive discussions since July, when President Donald Trump threatened to implement a 50% levy on nearly $20 billion (C$28 billion) of Canadian imports by August 19. Trump had temporarily paused these tariffs earlier in the week, suggesting that both sides were close to finalizing a "very good" trade deal for both nations.

However, minutes before the deal deadline, Carney stated that while "important progress" had been made, it was "not enough to meet our objectives for Canadians." He added, "As a result, this evening, I have decided to suspend trade negotiations with the U.S. and have directed negotiators to return to Ottawa." He reiterated that "last-minute changes in the US proposed terms were unfair, uneconomic, and called into question the reliability of any deal."

The breakdown in talks represents a significant shift from the optimistic tone earlier in the week, when both US and Canadian officials expressed confidence that a mutually beneficial trade agreement was within reach. Reports indicated that negotiators were discussing a deal to reduce US tariffs on Canadian steel and aluminum from 50% to 25%, and on Canadian autos from 25% to 15%. In return, Carney had requested Canadian provinces to reintroduce US alcohol to store shelves.

Tensions between the two major trading partners have been escalating since Trump's return to office in January last year, when he initiated a broad global tariff program, disrupting decades of free trade between Canada and the US.

With the collapse of talks, Canada will now face new 50% US tariffs imposed by Trump under the Depression-era Tariff Act of 1930. These tariffs will apply to a range of goods, including wine, dairy, cement, clothing, and hockey equipment. They are in addition to existing US tariffs already imposed on Canadian steel, aluminum, autos, and lumber.

Canada has been involved in intermittent trade negotiations with the US for over a year, seeking a deal that would see the US drop or reduce tariffs on these key sectors. Meanwhile, the US has requested several concessions from Canada, including the removal of its remaining retaliatory tariffs on American autos and adjustments to its dairy quotas to allow greater access for US cheese producers. The US has also asked for the lifting of the ban on US alcohol sales, which most Canadian provinces imposed last year in retaliation to Trump's tariffs.

Businesses and stakeholders on both sides of the border had advocated for a deal, arguing that the new US tariffs on Canada would harm both countries. The US Chamber of Commerce stated earlier in the week that "higher tariffs would damage both economies, drive up costs for US families, further disrupt critical supply chains, and risk the 13 million American jobs that depend on trade under the US-Mexico-Canada Trade Agreement."

A recent poll by Canadian firm Abacus Data indicated that approximately 36% of Canadians would support retaliating against US tariffs, while another 30% would prefer the Carney government to continue negotiating. Retaliation risks angering the Trump administration, with trade representative Jamieson Greer stating last week that the US is "not going to tolerate" counter-tariffs and would "take action."