US slaps 50% tariffs on Canadian goods as trade talks collapse

The US imposed 50 per cent tariffs on Canadian goods after trade talks broke down. Canada has suspended negotiations and promised matching retaliation, deepening uncertainty over North American trade.Image used for representational purposes onlyThe United States imposed 50 per cent tariffs on USD 20 billion worth of Canadian products early on Saturday, and Canada immediately said it would retaliate after last-minute negotiations failed to resolve the latest strain in ties between the two countries. The new tariffs cover about 5 per cent of what Canada ships to the US each year, including goods ranging from hockey sticks to tongue depressors.The move sharpens an already tense trade dispute and raises fresh questions over the future of the trade agreement linking the US, Canada and Mexico. Canadian Prime Minister Mark Carney said Ottawa would respond in kind, while US Trade Representative Jamieson Greer blamed Canada for the collapse of talks. No further talks are planned."Canada will match those tariffs dollar for dollar to protect our workers and businesses," Carney said in a statement. Canada had been seeking concessions on tariffs on steel, aluminium, automobiles and lumber. Shortly before midnight, Greer said, "Tonight, Canada declined to finalise the trade deal under the terms agreed earlier this week. Despite the US offer to Canada to receive the best treatment of any major exporter to our market, new demands and walk-backs of other commitments by Canada have upended the careful balance reached in the past days."Carney blamed the Republican administration for the breakdown, saying "last-minute changes in the US proposed terms were unfair, uneconomic, and called into question the reliability of any deal". He said he had suspended negotiations and directed Canada's negotiating team to return to Ottawa. Carney also said his government would announce additional support for Canadian workers and businesses in the coming days. Greer said the US offer was "forward-looking" and included "a historic economic and national security partnership". The breakdown marked a sharp reversal from two days earlier, when officials on both sides had sounded as if they were moving towards a compromise. Carney said Canada's goal throughout the negotiations had been to secure the best possible agreement, "never a deal at any price or on any deadline." Ontario Premier Doug Ford backed him, 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 tariffs had originally been due to take effect at 12.01 am on Wednesday, but US President Donald Trump extended the deadline by three days to allow more time for talks. The two countries sold each other USD 880 billion worth of goods and services last year. The dispute also comes on top of decades of trade tensions over issues such as Canadian softwood lumber imports and US access to Canada's protected dairy market. Even with those disputes, the two countries have long remained close allies and trading partners. Canadian soldiers fought alongside Americans in Afghanistan after the 9/11 attacks. The 5,525-mile US-Canada border is undefended, and nearly 330,000 people and USD 2 billion worth of goods cross it every day. About 800,000 Canadians live in the United States. Trump's approach marks a clear break from that traditional relationship. He has imposed tariffs on Canadian goods as part of his push to bring manufacturing back to the US and has also made comments about turning Canada into America's 51st state. Carney said Canada had recognised that "America has changed" and that the two countries would "not return to our old relationship".Public frustration in Canada has also grown. A petition calling for the expulsion of US Ambassador Pete Hoekstra has gathered nearly 248,000 signatures since July 21. It accuses the Trump ally of having "normalized" Trump's talk of annexing Canada, among other things. At the same time, both countries had reasons to find a compromise. Nearly 72 per cent of Canada's goods exports last year went to the United States, while the Trump administration faces the risk that new tariffs, paid by US importers and often passed on through higher prices, could add to voter anger over the cost of living before November's midterm elections.Ryan Majerus, a partner at King & Spalding and a former US trade official, said, "Canada likely wanted further sector-specific relief than the U.S. 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 chief executive of the Canadian Chamber of Commerce, called the tariffs "a body blow to North American competitiveness" and warned they would raise costs for Americans while threatening Canadian customers, investment and small businesses.Tariffs have become the centrepiece of Trump's second-term economic agenda. Last year, he imposed double-digit import taxes on almost every country, arguing that the long-running US trade deficit was a national emergency. In February, the Supreme Court ruled that he had overstepped his authority, struck down the trade penalties and set the stage for refunds to importers. Trump has since turned to another legal route. For Canada, he invoked Section 338 of the Tariff Act of 1930, a provision that has never before been used to impose tariffs. It allows the president to levy import taxes of up to 50 per cent on imports from countries judged to have discriminated against US businesses, without any investigation and with no limit on how long the duties can remain in place. The 1930 law is better known for the Smoot-Hawley tariffs, which economists and historians have long linked to a worsening of the Great Depression by restricting global trade.The latest rift comes as the US, Mexico and Canada are trying to renew the US-Mexico-Canada Agreement, which Trump negotiated in his first term and once praised as a success. Formal talks with Mexico have begun, but talks with Canada have not, and the escalating conflict has cast doubt on whether they will. Barry Appleton, a senior fellow at the Center for International Law at 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 sum, the failed talks have led to immediate tariffs and retaliation, while also deepening uncertainty over the wider trade relationship between the two countries.With PTI Inputs- EndsPublished By: India Today Web Desk Published On: Aug 22, 2026 19:06 IST