The latest tariffs imposed by the Trump administration on Canadian goods valued at billions of dollars came into effect just after midnight on Saturday, following the failure of both nations to reach a last-minute trade agreement that would have met their mutual interests.
Prime Minister Mark Carney announced that Canada would respond “dollar for dollar” after the U.S. followed through on its threat to impose steep 50 percent tariffs on a broad array of products. Trade representatives from both governments indicated that they were close to finalizing a deal in the days leading up to the tariffs, but Carney stated that Ottawa ultimately could not agree to the proposed terms.
“I have instructed our negotiators to return to Ottawa and have decided to halt trade negotiations with the U.S.,” the Prime Minister remarked in a statement.
“Our negotiators have exerted considerable effort, in good faith, to safeguard Canadian interests throughout these discussions until the very end. However, the last-minute modifications proposed by the U.S. were unjust, uneconomic, and cast doubt on the dependability of any agreement,” he added.
U.S. President Donald Trump has yet to offer any immediate comments on the situation.
In his statement, U.S. Trade Representative Jamieson Greer noted that the discussions fell apart because Canada did not accept the terms presented by the administration.
“Tonight, Canada decided not to finalize the trade agreement under the previously agreed terms, despite the U.S. offering Canada the best treatment of any major exporter to our market. New demands and retractions of previous commitments by Canada disrupted the delicate balance achieved in recent days,” stated Greer.
“Furthermore, Canada continues to uphold its extended retaliation against the United States, which includes outright bans on specific American goods and services.”
U.S. Trade Representative Jamieson Greer in March. (Abdul Saboor/Reuters)
The implementation of new tariffs from the U.S. and the commitment of Canada to impose counter-tariffs mark a significant escalation in the ongoing trade conflict between the two nations, which were previously viewed as closely aligned in trade matters.
Throughout the week, Canadian Trade Minister Dominic LeBlanc engaged with Greer in Washington, D.C., striving to secure an agreement before the administration’s deadline on Friday night.
Details regarding the tentative agreement were not disclosed, but sources have indicated that the deal would have reduced sectoral tariffs that have been adversely affecting the Canadian aluminum, steel, and automobile industries for several months. In exchange, Carney requested that Canadian premiers consider lifting provincial bans on American alcohol.
As of Thursday night, sources familiar with the discussions indicated that U.S. Commerce Secretary Howard Lutnick, a prominent figure in Trump’s cabinet, had shown dissatisfaction with the proposed agreement.
Following Carney’s announcement on Friday regarding a dollar-for-dollar response to the new tariffs, CBC News inquired with a senior official from the Trump administration about potential measures to resolve the escalating trade conflict.
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“In some aspects, the choice lies with the Canadians, right? If they wish to escalate matters, that is their decision,” the official stated on Friday, suggesting that options could be presented to Trump to “level the playing field” should Canada choose to retaliate.
On Friday, Canadian and U.S. negotiators raced against a midnight deadline to finalize a high-stakes trade agreement that could lower threatened U.S. tariffs on Canadian steel and aluminum, and return American alcohol to some provincial store shelves. Advisory Council on Canada-U.S. Economic Relations member Ralph Goodale speaks to Power & Politics.
‘This will be a body blow’
While discussions surrounding the tariffs have largely involved high-level political figures, businesses across both nations were anxiously anticipating the potential impact on their operations.
“This will deal a significant blow to North American competitiveness in this self-defeating trade saga,” said the Canadian Chamber of Commerce regarding the new U.S. tariffs. “Such a substantial and non-absorbable tariff is neither sustainable nor viable for businesses.”
Under the new policy from the Trump administration, tariffs of 50 percent will be applied to hundreds of products exceeding $28 billion in value, encompassing items from plywood and cement to wine and hockey sticks.
Canadian Trade Minister Dominic LeBlanc at Greer’s office in Washington on Thursday. (Tierney L. Cross/Reuters)
The Trump administration claims that the tariff imposition is a reaction to Canada’s retaliatory measures against U.S. trade policies and its discrimination against American sectors such as dairy, alcohol, and automotive.
Last month, Carney stated that the majority of these policies, including provincial restrictions on American liquor, were “merely” Canada’s response to the arguments initiated by the White House with the announcement of other tariffs last year.
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The new tariffs are enforced under Section 338 of the U.S. Tariff Act, also known as the Smoot-Hawley Act, which was established during the Great Depression nearly a century ago. This legislation grants the president the authority to levy tariffs up to 50 percent on countries identified as discriminating against the U.S. economy.
Historically, the tariff rates have typically been around 10 to 20 percent. Goods compliant with the Canada-United States-Mexico Agreement (CUSMA) have previously been exempt, but many of those products will no longer enjoy that exemption as of Saturday.
Hardest hit sectors, provinces
The electronics sector in Canada is poised to face the most significant impact, with exports exceeding $4 billion U.S. in electronic equipment now subject to Trump’s new tariffs. Specifically, certain electrical boards and controllers rank among the highest value exports to the U.S. in any threatened category.
Additionally, Canada’s plastics industry, which includes products such as bottles, floor coverings, and various household items, will also be affected. The value of goods in this category is approximately $3 billion U.S.
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British Columbia is expected to bear a disproportionate burden from these import taxes compared to other provinces. The goods impacted by the new tariffs, particularly wood and paper products, account for over 13 percent of the province’s total exports to the U.S., which is higher than any other province.
Quebec is also likely to experience significant losses, as roughly 10 percent of its exports are now subject to these tariffs. These new duties compound the already severe 50 percent tariffs on steel and aluminum, which are critical sectors in the province.