'Last-minute changes unfair, uneconomic': US-Canada trade talks collapse as Trump readies 50% tariffs on Canadian products

A late-night collapse in trade talks between the United States and Canada is set to push the two historic allies into another sharp escalation, with Washington preparing to impose 50% tariffs on $20 billion worth of Canadian products early Saturday. The new import taxes announced by President Donald Trump will affect about 5% of what Canada ships to the United States each year, covering goods ranging from hockey sticks to tongue depressors.

The breakdown came after last-ditch negotiations failed to produce an agreement despite a three-day extension to the original deadline. The tariffs were initially due to take effect at 12:01 am Wednesday, but Trump delayed the move to allow more time for talks. Even with that extension, the two sides were unable to reach a deal.

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What the US and Canada said

Shortly before midnight, US Trade Representative Jamieson Greer said on a press call: "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 walkbacks of other commitments by Canada have upended the careful balance reached in the past days."

Canadian Prime Minister Mark Carney responded, "Last-minute changes in the US proposed terms were unfair, uneconomic, and called into question the reliability of any deal." 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."

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Trade tensions and wider impact

The economic effect of the tariffs is significant, but the political impact may be larger. The United States and Canada traded $880 billion in goods and services last year, underscoring the scale of the relationship even as tensions have risen.

The two countries have argued over trade for decades, with recurring disputes over issues such as Canadian softwood lumber imports and US access to Canada's protected dairy market. Even so, they have remained friends, allies and major trading partners through those disputes.

A strained alliance

The latest clash comes against the backdrop of a relationship that has long extended beyond trade. Canadian soldiers fought alongside Americans in Afghanistan after 9/11. The 5,525-mile US-Canada border is undefended, and nearly 330,000 people and $2 billion worth of goods cross it every day. Around 800,000 Canadians live in the United States.

Trump's approach to Canada marks a clear break from that traditionally cooperative relationship. He has already imposed tariffs on Canadian goods in a push to bring manufacturing back to the United States, and has repeatedly made comments about turning Canada into America's 51st state.

Public anger and political pressure

Public frustration in Canada has also grown. A petition calling for the expulsion of the US ambassador, a Trump ally, has gathered nearly 248,000 signatures since July 21. It accuses Ambassador Pete Hoekstra of having "normalised" Trump's talk of annexing Canada, among other things.

Canada is especially exposed to any disruption in cross-border trade, with nearly 72% of its goods exports last year going to the United States. At the same time, the Trump administration may be cautious about imposing a large new tariff ahead of November's midterm elections, since US importers would pay the duty and may pass the cost on to consumers through higher prices. American voters are already frustrated with the high cost of living.