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Canada and the United States have moved closer to a fresh trade confrontation after negotiations collapsed late Friday, with Washington imposing a 50% tariff on nearly $28 billion worth of Canadian imports from 12:01 a.m. ET. Canadian Prime Minister Mark Carney ordered negotiators back to Ottawa, calling the latest US demands “unfair, uneconomic” and warning that Canada would respond “dollar for dollar” to protect workers and businesses.

Carney said Canada had made significant progress in recent weeks but failed to achieve its objectives. “We have worked in that context. To strike a fair deal that would provide the best access to the U.S. market and greater certainty to Canadian businesses and workers,” he said, adding that Ottawa wanted the best deal for Canadians, “never a deal at any price or on any deadline.”

Canada-US trade war fears rise as Ottawa pulls negotiators

Announcing the suspension, Carney said US changes at the last minute had undermined confidence in a possible agreement. “They have worked hard, in good faith, to defend the interests of Canadians throughout these negotiations up until the very last minute,” he said. “However, last-minute changes in the U.S. proposed terms were unfair, uneconomic, and called into question the reliability of any deal.”

Carney said Canada would match the US tariffs on the roughly $28 billion in affected goods. Additional support measures will be announced, building on nearly $25 billion already provided to workers and businesses over the past 18 months. He said Canada was also advancing nearly $500 billion in infrastructure projects and opening new export markets.

Canada-US trade tensions deepen as Washington hits back

The US Trade Representative accused Ottawa of walking back commitments and making fresh demands, calling the breakdown “a missed opportunity for Canada” to partner with what it described as the fastest-growing G7 economy. Washington said it had offered Canada better treatment, including major tariff reductions covering steel, aluminium, autos and lumber.

The US also accused Canada of maintaining “prolonged retaliation”, including “flat-out prohibitions on certain American goods and services.” Its proposed package also included export-control cooperation, action against transhipment, digital-trade alignment, aerospace supply-chain coordination, critical-minerals cooperation, forced-labour import enforcement and formal USMCA negotiations.

Canada-US trade fight pushes Ottawa toward new markets

Carney said Canada would not depend solely on the US and that existing free-trade agreements already give it preferential access to 1.5 billion consumers, with that figure expected to double by year-end. “Canada has what the world wants. And we will not allow any nation to determine our future. We will set our own course to keep building Canada strong for all,” he said.

Canada’s Office of the Chief Economist said exports to the US fell 3.7% last year, while exports to non-US markets rose 11.1%. Those markets now represent 32.8% of Canadian exports, their highest share in four decades. Carney also said Canada’s growth was accelerating, with the economy on course for the second-fastest G7 growth over two years, jobs being created at four times the US rate and foreign investment at its highest level in two decades.

(via agency inputs)

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