A breakdown in negotiations has left the closely integrated North American trading relationship facing fresh tariffs and an uncertain future, as Canada prepares retaliatory measures.
Trade negotiations between the US and Canada have broken down, with US President Donald Trump accusing Canada of seeking the benefits of being a US state without becoming one.
The collapse came late on Friday after both sides had expressed optimism earlier in the week that they could reach a new trade agreement.
The breakdown has triggered new 50% US tariffs on a range of Canadian goods, adding to existing duties on Canadian steel, aluminium, automobiles and lumber. The latest measures cover about $20bn of imports, or roughly 5% of total Canadian imports to the US.
Canadian Prime Minister Mark Carney described the tariffs as a “miscalculation” intended to “hurt and divide us”. He said Canada would respond with tariffs of its own on a “dollar-for-dollar” basis from 8 Sep, including duties on steel, dairy products, appliances and electronics.
The latest dispute marks a sharp deterioration in relations between the two countries, whose economies are closely integrated.
Trump has repeatedly suggested making Canada the “51st state” since returning to office, comments that have frustrated Canadian political leaders and the public. His latest remarks, made in an interview with Fox News, accused Canadians of being “foolish” to enter a trade war with the US.
Both sides blame the other
The two governments have offered conflicting accounts of why the negotiations collapsed.
Carney said US negotiators introduced “last-minute changes” that were unfair and uneconomic. He said the US had presented unacceptable terms, including restrictions on Canada’s ability to negotiate new trade agreements with other countries.
US negotiators, meanwhile, accused Canada of introducing new demands and reversing previously agreed terms.
US trade representative Jamieson Greer said there were no plans to resume negotiations. He said Washington had been prepared to reduce some of its tariffs on Canadian goods as part of the proposed agreement.
Carney rejected the claim that Canada had made last-minute requests, saying the government had clarified what was being offered and had been disappointed by the US response.
The Canadian prime minister has received support from leaders across the country’s political spectrum. Ontario Premier Doug Ford said Trump could not be trusted, while British Columbia Premier David Eby said US demands on Canada’s trade policy would effectively reduce the country to “the economic equivalent of the 51st state”.
Conservative opposition leader Pierre Poilievre also described the new US tariffs as unjustified.
Quebec Premier Christine Fréchette warned that the measures could cost jobs, while Alberta Premier Danielle Smith called for both sides to return to negotiations.
Uncertain future for North American trade
Tariffs have been a central part of Trump’s trade policy, with the US president arguing that they can strengthen domestic manufacturing and support jobs.
Critics have warned that tariffs can increase prices for consumers and disrupt international trade.
The latest dispute follows more than a year of intermittent negotiations, which intensified after a US deadline for reaching a deal or facing further tariffs.
The US, Canada and Mexico are also reviewing the United States-Mexico-Canada Agreement (USMCA), the North American trade pact introduced during Trump’s first term to replace the 1994 North American Free Trade Agreement (NAFTA).
USMCA supports about $1.6tn in annual trade between the three countries. Canada and Mexico had earlier requested that the agreement be renewed for another 16 years, but the US declined to extend it in its current form.
Asked about the impact of the latest breakdown on USMCA, Carney said it was “certainly not good news”.
Source: BBC
