Canada will impose retaliatory tariffs on US goods from next month, Prime Minister Mark Carney said, after trade talks collapsed and the US imposed 50 per cent duties on $20 billion of Canadian products.
The new tariffs ordered by US President Donald Trump cover hundreds of Canadian goods, including plywood, liquor, electrical equipment and hockey gear. They affect about 5 per cent of Canada’s exports to the US.
Mr Carney said Canada would respond “dollar for dollar”, aiming at US steel, dairy, appliances, agricultural equipment, pulp and paper, electronics and other goods.
“In the coming days, we will release the details of these new tariff measures,” Mr Carney said. The duties will come into effect on September 8.
The Canadian move follows three days of intensive negotiations that both governments had hoped would produce a deal and avert the new US tariffs.
Instead, talks broke down late Friday. Mr Carney blamed Washington, saying its final proposals were “uneconomic, unfair” and undermined the benefits Canada would receive from an agreement.
“This was not our choice,” Mr Carney said. “We were ready and close to having a comprehensive agreement that would be fair to both countries.”
The Prime Minister said the US then introduced demands involving Canadian sovereignty, the French language, and Quebec and Canadian culture.
“That is not acceptable. That would never be acceptable,” Mr Carney said. He added that Canada would not compromise on protecting its languages or culture.
Mr Carney said Washington also sought restrictions on Canada’s ability to negotiate future trade agreements with other countries. “We cannot accept what they have offered, and we will not give what they have asked,” he said.
The US Trade Representative Jamieson Greer gave an opposite account, accusing Canada of making new demands and backing away from commitments reached during the negotiations.
Mr Greer called the collapse “a missed opportunity for Canada to partner with the United States” and said Washington was moving ahead with measures responding to Canadian retaliation.
Trade pact threatened
The breakdown came after Mr Trump briefly delayed his tariffs to give negotiators more time. That three-day window had raised hopes of a deal before the new duties took effect Saturday.
The new US tariffs are being imposed under Section 338 of the Tariff Act of 1930, a rarely used provision giving the president authority to impose duties on countries considered to be discriminating against US commerce.
The measures exclude some of Canada’s most important exports to the US, including oil, potash and critical minerals. Canada remains the largest foreign supplier of crude oil and petroleum products to the US.
The new tariffs nevertheless add to existing US duties on Canadian steel, aluminium, timber and cars. The combined pressure threatens to deepen the strain on Canada’s economy and hit vulnerable industries.
Mr Carney said Ottawa would introduce support measures for affected workers and businesses. The government has already committed billions of dollars to help companies withstand the broader tariff dispute.
Canadian business groups warned of a difficult period ahead. The effects are expected to be particularly severe in machinery and electronics, plastics and rubber, furniture, wood, paper, chemicals and cosmetics.
The dispute has affected negotiations to renew the US-Mexico-Canada Agreement. Mr Trump earlier this year declined to renew the treaty in its current form.
Mr Carney said the latest escalation “calls into question” the future of the continental trade pact.
The Canadian leader also used the collapse to argue for a fundamental shift in his country’s economic strategy.
“America has changed,” Mr Carney said, recalling his earlier warning that US commitments could no longer be taken for granted. “Its signature was written in pencil.”
He said Canada would accelerate efforts to diversify its trade and reduce its dependence on the US.
“Building at home and diversifying trade abroad is not our Plan B,” Mr Carney said. “It has been our Plan A from the start.”
Asked whether Canada was now in a trade war with its largest trading partner, Mr Carney offered the bluntest description yet.
“You are at war when you get attacked,” he said. “We got attacked.”
