America, Canada Enter Into Punishing Trade War After Last-Minute Breakdown of Talks

TORONTO — Prohibitive 50 percent tariffs on $20 billion worth of Canadian goods went into effect Saturday following the collapse of down-to-the-wire trade talks, with Canada promising to retaliate dollar for dollar. Each side accused the other of making unacceptable last-minute demands. The breakdown, coming just days after President Trump announced that a deal was in hand, further roils a once-close relationship between the continental neighbors and threatens economic pain on both sides of one of the world’s largest trading relationships just months before the American mid-term elections.The countries were believed to have been on the verge of a broad agreement settling issues dating from the early days of Mr. Trump’s second term after the American president posted on Truth Social this week that “Canada and the U.S.A., subject to the finalization of documents, have a DEAL!” Canada’s prime minister, Mark Carney, had been more cautious, saying only that “significant progress” had been made.But with the clock ticking down to a Friday midnight deadline before the new American tariffs kicked in, Mr. Carney ordered his negotiators to leave the table, saying, “Last-minute changes in the U.S. proposed terms were unfair, uneconomic and called into question the reliability of any deal.”In a Saturday morning address to his nation, Mr. Carney said Canada has recognized from the start “that America has changed” and that “sometimes, its signature is written in pencil.” He said his government “cannot accept what they offered and we will not give what they asked,” adding that his negotiators “were not prepared to compromise Canada’s sovereignty or undermine our key industries.”The United States trade representative, Jamieson Greer, countered in a virtual meeting with reporters saying “new demands and walk backs of other commitments by Canada” were responsible for the breakdown, even though the northern neighbor had been offered “the best treatment of any major exporter to our market.”The new tariffs will dramatically raise the cost for Americans on dozens of Canadian products including household plastics and chemicals, electronics, building materials, some paper and lumber, alcohol, textiles and sporting goods — including, famously, maple syrup and hockey sticks. Certain strategic items are excluded, including petroleum, critical minerals and potash.Canada has not yet announced what American goods will be hit with retaliatory tariffs but an 18-month-old ban imposed by eight provinces on the sale of American wine and spirits that cost the industry $357 million last year is expected to continue, days after Mr. Carney had asked the provincial premiers to prepare to lift them.America has threatened to respond to any new Canadian tariffs, further escalating a trade war that many Canadians say they are ready to endure, even though their country has more to lose. In a recent survey by Canada’s Leger polling organization, 56 percent of respondents said the Carney government should take a hard line and make no more concessions, compared to 31 percent who thought it should be flexible and make concessions.Mr. Carney also enjoys the support of most provincial premiers, including Doug Ford in Ontario, home to some of the hardest-hit sectors including the auto industry, which is closely integrated with American auto-makers in Detroit.“Team Canada needs to stand together more united than ever before,” Mr. Ford said in a post on social media. “The prime minister has my full support for a strong response — tariff for tariff, dollar for dollar. As we fight to protect Canadian sovereignty and economic security, everything needs to be on the table.”Canadian business leaders are less enthusiastic about the looming trade war. “This will be a body blow to North American competitiveness in this self-defeating trade saga,” said the chief executive of the Canadian Chamber of Commerce, Candace Laing, in a formal statement. “A whopping, non-absorbable tariff is not sustainable or viable for business. Americans will see their costs go up, and Canadians will see customers, investment and small businesses disappear.”Canada had been hoping in the negotiations not only to ward off the latest round of 50 percent tariffs but also to roll back some previously imposed tariffs, especially impacting autos, steel, aluminum and softwood lumber. Leaked details from the talks had suggested the existing steel tariff would be reduced from 50 percent to 25 percent and the auto tariff from 25 percent to 15 percent. It further emerged late in the week that the reduced steel tariff would apply only to the first 4 million metric tons per year.The American side, for its part, had been looking forward to a ”digital trade alignment” and guarantees on the supply of Canadian oil and critical minerals that, in the words of Mr. Greer, would make “the continent a manufacturing and energy powerhouse.”Mr. Carney said efforts to reach a comprehensive agreement broke down when the Americans asked for changes, “including threats on French language and culture and Canadian culture that would never be acceptable for that reason. That marked the end of that stage of negotiations.”This article has been updated to include remarks from Mr. Carney’s Saturday morning address to Canadians.

America, Canada Enter Into Punishing Trade War After Last-Minute Breakdown of Talks

America, Canada Enter Into Punishing Trade War After Last-Minute Breakdown of Talks

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