Crucial trade talks between the United States and Canada to stave off punishing new tariffs by the Trump administration on Canadian goods collapsed late Friday, with Canada saying it would retaliate “dollar for dollar.”
Prime Minister Mark Carney of Canada said he had decided to suspend the talks because the American side had introduced last-minute terms that were “unfair, uneconomic, and called into question the reliability of any deal.”
He added that the talks, which had been going on for weeks and had intensified in the past few days, had marked important progress but had ultimately “not been enough to meet our objectives for Canadians.”
United States Trade Representative Jamieson Greer told reporters that Canada had walked away from the negotiating table, minutes before a deadline ushering in new 50 percent tariffs by the Trump administration on a broad range of Canadian goods.
“Tonight, Canada declined to finalize the trade deal under the terms agreed earlier this week, despite the U.S. offer to Canada to receive the best treatment of any major exporter to our market,” Mr. Greer said on a virtual briefing with the press.
“New demands and walk backs of other commitments by Canada have upended the careful balance reached in the past days,” Mr. Greer added.
Shortly before Mr. Greer’s statement to the press, U.S. Customs and Border Protection sent out guidance for importers saying that the Canadian products that the president had identified would face tariffs after 12:01 a.m.
Speaking to reporters, a U.S. official said that Canada wanted concessions that the United States wasn’t prepared to give, particularly when it came to the automotive sector, as well as trade in steel, aluminum and lumber.
If Canada does retaliate, the official said, Mr. Trump would be provided with options “to level out the playing field once again.”
In his statement, Mr. Carney said Canada would retaliate against the new tariffs, which will affect $20 billion in Canadian exports by the U.S. administration’s calculations, “to protect our workers and businesses.”
In addition to making hundreds of Canadian products like cheese and hockey sticks price-prohibitive in the U.S. market, the tariffs will further fracture the once-close relationship between the countries, which has drastically deteriorated since Mr. Trump returned to office, targeted Canada with tariffs and repeatedly proposed that it be annexed as the 51st state.
Negotiators from both countries have been cooped up in the United States trade representative’s office in Washington for up to 10 hours a day for several days this week hammering out the details of the failed agreement.
Just hours before the two sides announced negotiations had been suspended, Mr. Trump said he thought a deal could be reached with Canada. On Tuesday he declared that the two nations had reached a deal aside from working out some details and had extended an earlier deadline that would have introduced the new tariffs.
But Mr. Carney made good on his promise to walk away from a deal he didn’t think was good enough. Polling suggests that many Canadians support his decision. A recent Léger poll found that 56 percent of respondents are opposed to any further trade concessions from Canada.
He also got an early endorsement for his decision to walk away from talks from Doug Ford, the premier of Ontario, Canada’s most populous province and home to the country’s important auto industry. “As we fight to protect Canadian sovereignty and economic security, everything needs to be on the table. Ontario is ready to do its part,” Mr. Ford said.
In addition to fending off the new tariffs, Canada wanted to use the talks to roll back and ideally eliminate tariffs of up to 50 percent that Mr. Trump has imposed on the country’s steel, aluminum and autos. Canadian negotiators also hoped to achieve some relief on softwood lumber tariffs that go back decades and were augmented with additional tariffs from Mr. Trump.
The U.S. side wanted the eight Canadian provinces that had barred American wine and spirits from their government-owned alcohol distribution systems to end the boycotts, which were brought in last year in response to Mr. Trump’s trade attack. It also wanted Canada to drop its retaliatory tariff on American cars and to change how American dairy products are allowed into Canada’s tightly controlled market.
In the final days of negotiations, it appeared that Canada had become resigned to only succeeding in reducing, not eliminating, the current tariffs.
Leading into Friday’s talks, several people in both countries briefed on the negotiations described U.S. proposals that still maintained substantial, if lower, tariffs on the two metals and autos.
They said that the plan would cut steel and aluminum tariffs to 25 percent from 50 percent. But only a limited quantity of Canadian steel would be allowed at that reduced rate, with the balance still facing a 50 percent tariff.
Under the plan, the people briefed said, autos would fall to 15 percent from 25 percent, with the rate being adjusted for American parts, which typically make up about half the value of a vehicle made in Canada. Executives and analysts in the auto industry said that would still leave production in Canada unprofitable and likely doom assembly plants in the country.
While the Supreme Court struck down most of Mr. Trump’s tariffs in February, both last year’s tariffs and the new measures against Canada were brought under other trade laws that were not covered by the decision.
The legal provision that Mr. Trump has used to impose the new 50 percent tariffs on Canada, Section 338, stems from a 1930 law and has never been used before. The tariffs could face legal challenges in the coming weeks.
The development was bad news for consumers and businesses on both sides of the border, warned Candace Laing, who leads the Canadian Chamber of Commerce.
“This will be a body blow to North American competitiveness in this self-defeating trade saga,” she said. “Americans will see their costs go up, and Canadians will see customers, investment and small businesses disappear.”
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