US slaps 50% tariffs on Canadian goods as Ottawa vows matched retaliation

The United States imposed 50 per cent tariffs on USD 20 billion of Canadian goods after talks with Ottawa collapsed. Canada's matching response has deepened a rare rupture in ties and clouded North America's trade pact.

In Short

• Canada plans dollar-for-dollar duties from September 8 on key industrial sectors
• Washington's late demands touched vehicles, sovereignty, trade autonomy and culture
• No further talks are planned after optimism briefly rose earlier

The United States imposed 50 per cent tariffs on USD 20 billion worth of Canadian goods early Saturday after last-minute talks failed, deepening the latest strain in ties between the two countries. Canada said it would retaliate from September 8 with matching measures, raising the stakes in a trade dispute between two long-standing allies.

The new US tariffs will affect about 5 per cent of Canada’s yearly exports to the United States, covering products ranging from hockey sticks to tongue depressors. The breakdown in negotiations has also cast fresh doubt over the future of the North American trade pact involving the United States, Canada and Mexico.

From Ottawa, Carney said Canada would announce details of its new tariffs in the coming days and that they would take effect on the Tuesday after Labour Day. He said the dollar-for-dollar retaliation would target steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics.

Carney said Canada had been prepared to remove its remaining retaliatory tariffs on steel, aluminium and automobiles if the United States had substantially lowered its own tariffs. He also said Ottawa was willing to encourage provinces to restore sales of US alcohol. But he said Washington’s final demands crossed a line. “They asked too much and offered too little,” Carney said.

He said the United States had introduced last-minute conditions that would have reduced tariff relief for Canadian-made vehicles, limited Canada’s ability to pursue trade deals with other countries, and weakened protections linked to language, culture and sovereignty. He described those demands as “unacceptable”. Carney also said Canada had recognised that “America has changed” and that the two countries would “not return to our old relationship”.

US Trade Representative Jamieson Greer said the administration had offered to reduce tariffs on steel, automobiles and lumber, calling them “things that are sensitive for them”. Speaking to Fox & Friends Weekend, he said, “And they’ve always had the best deal, and they still would have an even better deal, but they didn’t want that.” He added, “We’re moving forward with measures that respond to Canadian retaliation.” Greer also said, “We’ve said enough, and so we’ve taken countermeasures. Our interest is in protecting American workers and protecting American supply chains.”

No further talks are planned. The collapse marked a sharp change from the mood just two days earlier, when officials on both sides had sounded hopeful about a compromise. Trump had also extended the original deadline by three days after the tariffs had initially been due to begin at 12.01 am Wednesday.

Carney said Ottawa would “hit back” with targeted tariff protection for industries exposed to the new US duties, including some steel products. Ontario Premier Doug Ford backed the move, saying the prime minister had his “full support” for retaliation “tariff for tariff, dollar for dollar” and that “everything needs to be on the table”.

The political impact could be greater than the economic fallout. The two countries traded USD 880 billion in goods and services last year. The United States and Canada have often argued over issues such as softwood lumber and access to Canada’s dairy market, but they have continued as close allies and major trading partners. Their 5,525-mile border is undefended, nearly 330,000 people and USD 2 billion worth of goods cross it daily, and about 800,000 Canadians live in the United States.

Trump’s handling of Canada has marked a break from that traditionally cooperative relationship. Along with imposing tariffs in an effort to bring manufacturing back to the United States, he has also made remarks about turning Canada into America’s 51st state. Public frustration in Canada has grown, with a petition seeking the expulsion of US Ambassador Pete Hoekstra drawing nearly 248,000 signatures since July 21.

Both sides had reasons to seek a settlement. About 72 per cent of Canada’s goods exports last year went to the United States. In the United States, the administration may be cautious about fresh tariffs before November’s midterm elections because import taxes are paid by US importers and can be passed on to consumers through higher prices, at a time when voters are already unhappy with the cost of living.

Ryan Majerus, a partner at King & Spalding and a former US trade official, said, “Canada likely wanted further sector-specific relief than the US was willing to offer, or Canada’s concessions did not go far enough. Either way, I think both sides will be under immense pressure in the coming days to still find an off-ramp. But if Canada has agreed to also impose tariffs, the off-ramp may be even harder to find.” Candace Laing, president and CEO of the Canadian Chamber of Commerce, called the tariffs “a body blow to North American competitiveness” and said they would raise costs for Americans while threatening Canadian customers, investment and small businesses.

Trump has made tariffs central to his second-term economic agenda. Last year, he imposed double-digit import taxes on nearly every country after declaring the long-standing US trade deficit a national emergency. In February, the Supreme Court ruled that he had exceeded his authority, struck down those trade penalties, and cleared the way for importer refunds.

To target Canada this time, Trump turned to Section 338 of the Tariff Act of 1930, a provision from the Great Depression era that has never before been used to impose tariffs. It allows the president to levy import taxes of up to 50 per cent on goods from countries judged to have discriminated against US businesses, without requiring an investigation or setting a time limit.

The dispute has also created uncertainty around the renewal of the US-Mexico-Canada Agreement, which Trump negotiated in his first term and once praised. The United States has begun formal talks with Mexico on revising the pact, but talks with Canada have not started, and the widening trade clash has raised questions over whether they will. Barry Appleton of New York Law School said, “Canada told the Americans in advance that if these tariffs landed, it would stop negotiating and retaliate. 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.”

In summary, the latest US tariffs and Canada’s planned response have pushed a usually close partnership into a deeper trade confrontation, ended the latest round of negotiations without a deal, and added fresh uncertainty to the wider North American trade relationship.

With PTI Inputs

- Ends