Canada says it will match US tariffs 'dollar for dollar' as trade talks break down

Canada notes it will match US tariffs 'dollar for dollar' as trade negotiations break down.

Key points

• Now that discussions have broken down, Canada will be hit with new 50% US tariffs imposed by Trump using a Depression-era law called the Tariff Act of 1930.
• Negotiators were reportedly discussing a accord that would reduce US tariffs on Canadian steel and aluminium from 50% to 25%, and on Canadian autos from 25% to 15%.
• Announcing the suspension of negotiations shortly before the Friday night deadline, Canadian Prime Minister Mark Carney remarked he would impose reciprocal tariffs on US goods "dollar for dollar".
• Retaliation risks upsetting the Trump administration, with trade representative Jamieson Greer saying the US is "not going to tolerate" counter-tariffs.
• In exchange, Carney had asked Canadian provinces to restore US alcohol to store shelves.

In practice, a fresh wave of US tariffs on a wide array of Canadian goods has come into effect as of midnight on Saturday after a last minute break down in trade discussions.

Carney remarked "last-minute changes in the US proposed terms were unfair, uneconomic, and called into question the reliability of any deal".

After President Donald Trump threatened to impose a 50% levy on almost $20bn (C$28bn) of Canadian imports by 19 August, trade negotiators had been engaged in intense discussions since July.

Trump had temporarily paused those tariffs earlier in the week, saying the two sides were close to signing a trade accord that was "very good" for both countries.

But minutes before a deadline for a accord, Carney stated that while "important progress" had been created in the negotiations it was "not enough to meet our objectives for Canadians".

"As a result, this evening, I have decided to suspend trade negotiations with the U.S. And have directed negotiators to return to Ottawa, " he remarked.

When both US and Canadian office-holders sounded optimistic that a trade accord beneficial for both countries was within reach, the breakdown in discussions marks a significant shift in tone from earlier in the week.

Tensions between the two major trading partners have been simmering since Trump returned to office in January last year and unleashed a wide-ranging global programme of tariffs, upending decades of free trade between Canada and the US.

They will be applied on a range of goods, including wine, dairy, cement, clothing and hockey equipment.

They are along with existing tariffs the US had already imposed on Canadian steel and aluminium, autos and lumber.

Canada has been engaged in on-again, off-again trade negotiations with the US for over a year in pursuit of a accord that would see the US drop or reduce tariffs on these key sectors.

For context, the US, meanwhile, has been asking for a number of concessions from Canada, including removing its remaining retaliatory tariffs on American autos and adjusting its dairy quotas to allow greater access for US cheese producers.

It has additionally asked for the ban on US alcohol sales, imposed last year by most Canadian provinces in retaliation to Trump's tariffs, be removed.

Businesses and stakeholders on both sides of the border had pushed for a accord to be reached, arguing that the new US tariffs on Canada will be harmful to both countries.

Notably, the US Chamber of Commerce remarked earlier in the week in an official note that "higher tariffs would damage both economies, drive up costs for US families, further disrupt critical supply chains, and risk the 13 million American jobs that depend on trade under the US-Mexico-Canada Trade Agreement".

While another 30% would want the Carney administration to continue negotiating, a recent poll by Canadian firm Abacus Data suggested that around 36% of Canadian would backing retaliating to US tariffs.

Retaliation risks upsetting the Trump administration, with trade representative Jamieson Greer saying the US is "not going to tolerate" counter-tariffs. "We'll take action, " he remarked to journalists last week.

For now, canada says it will match US tariffs ' dollar for dollar' as trade remains the part of the story worth watching, and further updates are likely as more details are confirmed.