Canada and the United States have entered a new phase of their trade dispute after negotiations collapsed and Ottawa announced retaliatory tariffs against American goods.
Prime Minister Mark Carney said Canada would respond to new US tariffs with a “dollar for dollar” package of its own, accusing Washington of making demands that threatened Canada’s economic interests and sovereignty.
“We cannot accept what they have offered, and we will not give what they have asked,” Carney said on Saturday.
The breakdown came after months of negotiations aimed at reaching a new trade agreement between the two countries. Carney said US negotiators had introduced terms in recent days that were “uneconomic” and unfair, including restrictions on Canada’s ability to pursue trade agreements with other countries.
US Trade Representative Jamieson Greer has disputed that narrative, noting that Canada had backed away from terms that had already been agreed and suggested there were currently no plans to resume negotiations.
Canada prepares retaliation
Canada’s new tariffs will take effect on September 8 and will target a range of US products, including steel, dairy, appliances, agricultural equipment, pulp and paper and electronics.
The measures are a response to new US tariffs of 50% on about $20 billion worth of Canadian goods that came into force on August 22. The latest US tariffs cover products including clothing, beer, cement, furniture, food products and sporting goods, while some major Canadian exports remain exempt.
The new duties come on top of existing US tariffs on Canadian steel, aluminium, automobiles and lumber.
Carney said Canada was imposing its countermeasures reluctantly because they could increase costs for Canadian consumers and hurt US companies that sell into the Canadian market.
A deeper rupture
The dispute marks another deterioration in a trade relationship that has traditionally been among the world’s most integrated.
Canada and the US exchange hundreds of billions of dollars in goods and services each year, with supply chains stretching across industries from energy and manufacturing to agriculture and automotive production.
Carney has increasingly argued that Canada needs to reduce its dependence on the US and expand trade elsewhere. He said Ottawa had signed more than 20 trade and security agreements over the past year and plans to pursue further agreements with countries including India, ASEAN members and the European Union.
The latest confrontation is also raising questions about the future of the United States-Mexico-Canada Agreement, or USMCA, which replaced NAFTA and governs much of North American trade.
Carney described the latest breakdown as a “bad development” for the agreement.
For now, neither side appears ready to return to the negotiating table. The immediate focus will be on how far the tariff measures escalate and whether the economic pressure forces Washington and Ottawa back into talks.
The dispute also carries political weight. Relations between the two countries have deteriorated sharply as President Donald Trump has pursued a more aggressive tariff policy, while Canadian leaders have increasingly framed the trade conflict as a question of economic independence.
Carney has made clear that Ottawa is prepared to absorb short-term costs rather than accept a deal he believes would leave Canada more vulnerable to US pressure.
