US, Canada Tariff Row Escalates. The Political Fallout May Be Bigger Than Economic Impact.
The US imposed 50% tariffs on $20 billion worth of Canadian products, forcing the latter to announce retaliatory steps, the Associated Press reported.
The moves came after last-ditch negotiations failed to resolve the latest strain in the tense bilateral relationship between long-time allies, according to the AP report.
US President Donald Trump‘s import taxes are expected to impact about 5% of Ottawa’s shipments to Washington annually.
The Canadian imports include a wide range of products, from hockey sticks to tongue depressors. Prime Minister Mark Carney said in a statement, “Canada will match those tariffs dollar for dollar to protect our workers and businesses.”
The retaliatory move announced by Canada is seen as escalating the trade war between the two countries. It has also cast doubts on the future of a North American trade pact between the US, Canada, and Mexico, seen as vital for the industry in all three countries.
Canada had sought concessions on Trump tariffs on steel, aluminum, autos, and lumber. Washington was in no mood to accept that demand, a senior Trump administration aide said.
US Trade Representative Jamieson Greer blamed Canada in a statement shortly before midnight on Friday. “Tonight, Canada declined to finalize the trade deal under the terms agreed earlier this week,” Greer said.
He claimed that the situation came “despite the U.S. offer to Canada to receive the best treatment of any major exporter to our market, new demands and walk-backs of other commitments by Canada have upended the careful balance reached in the past days.”
Canada struck a defiant note with prime minister Carney blaming the US for the impasse.
“Last-minute changes in the U.S. proposed terms were unfair, uneconomic, and called into question the reliability of any deal,” the Canadian prime minister said. Carney said this has prompted his country to suspend negotiations. Canada’s negotiating team was directed to return to Ottawa, Carney disclosed.
Carney also announced that his government would roll out steps to support workers and businesses likely to be impacted by the impasse in the coming days.
Greer had claimed that Washington’s offer was “forward-looking” and included “a historic economic and national security partnership,” implying that the United States was squarely blaming its ally for the deadlock.
The countries have not scheduled another round of talks as of now. The stalemate in the negotiations came after officials from both countries expressed optimism that a deal was imminent just two days ago.
Canada aimed to secure the best possible agreement, “never a deal at any price or on any deadline,” throughout the negotiations, Carney claimed.
The AP report said the political fallout of the deadlock would be even bigger than the economic fallout. In 2025, the countries conducted goods and services trade worth $880 billion.
The US had initially announced that the tariffs would kick in at 12:01 a.m. on Wednesday, but later extended the deadline for three days to purportedly allow some room for last-ditch talks. That has also failed to break the impasse. The countries are now poised to impose tit-for-tat tariffs.
