Canada imposes reciprocal tariffs as US trade talks collapse

The clock ran out at midnight Saturday. After weeks of intense negotiation, Canada and the United States abandoned their attempt to reach a trade agreement, and a fresh round of American tariffs—50 percent on roughly $20 billion worth of Canadian goods—slipped into effect without a deal to stop them.

Canadian Prime Minister Mark Carney made the call to walk away minutes before the Friday night deadline. He said the Americans had shifted their terms at the last moment in ways that were unfair and economically unsound, and that the changes raised fundamental questions about whether any agreement with the Trump administration could be trusted. "Last-minute changes in the US proposed terms were unfair, uneconomic, and called into question the reliability of any deal," Carney said in announcing the suspension of talks. He ordered Canadian negotiators back to Ottawa and promised to impose matching tariffs on American goods—dollar for dollar, whatever the US had taken.

The American side told a different story. US Trade Representative Jamieson Greer said Canada had introduced new demands and walked back earlier commitments just as the two countries were closing in on a final agreement. The US, he said, had offered Canada better treatment than any other major exporter received, only to have that careful balance upended at the eleventh hour.

The breakdown was jarring because the mood had shifted dramatically just days earlier. Both sides had sounded optimistic. Negotiators had been working toward a deal that would have cut American tariffs on Canadian steel and aluminum from 50 percent down to 25 percent, and on automobiles from 25 percent to 15 percent. In return, Carney had asked Canadian provinces to restore American alcohol to their store shelves—a ban most provinces had imposed the previous year in retaliation for Trump's tariffs. Important progress, officials said. A deal was close.

But the tensions that had been building since Trump returned to office in January 2025 proved too deep to bridge. The president had unleashed a sweeping tariff campaign that upended more than a decade of relatively free trade between the two countries. Canada had been negotiating for over a year to try to undo the damage, seeking relief on steel, aluminum, autos, and lumber. The Americans, meanwhile, wanted Canada to remove its retaliatory tariffs on US autos, adjust its dairy quotas to let in more American cheese, and lift the alcohol ban.

Now, with talks dead, the new tariffs take effect on wine, dairy, cement, clothing, and hockey equipment—goods that touch everyday life on both sides of the border. These are layered on top of tariffs already in place on steel, aluminum, autos, and lumber. The American Chamber of Commerce had warned that higher tariffs would damage both economies, drive up costs for American families, disrupt supply chains, and threaten the roughly 13 million American jobs that depend on trade under the existing US-Mexico-Canada agreement.

Carney has signaled that Canada will retaliate in kind. A recent poll suggested about 36 percent of Canadians support hitting back at American tariffs, while 30 percent would prefer continued negotiation. But Greer has made clear the US will not accept counter-tariffs without a fight. "We're not going to tolerate" them, he said, and promised the administration would "take action." What that action looks like, and how far the two countries are willing to escalate, remains to be seen. The machinery of reciprocal retaliation is now in motion, and the prospect of a negotiated settlement has receded.