Canada on Saturday suspended trade negotiations with the United States after last-minute changes to Washington’s proposed terms were deemed “unfair” and “uneconomic” by Prime Minister Mark Carney, abruptly derailing talks that had appeared close to a deal.The breakdown came hours after US President Donald Trump said the agreement with Canada was “moving along” and expressed confidence that the two sides could reach a deal.Speaking to reporters at Joint Base Andrews before departing for Myrtle Beach, South Carolina, Trump was asked about the status of the Canada deal.“Pretty much, I think so, we’ll see. I’ve dealt with the Prime Minister, have a good relationship and yeah, we have to take care of our farmers. Our farmers are very important to me and the deal with Canada is moving along and we should be able to have a deal with Canada.”But later, Carney announced that Canada had decided to suspend the negotiations and ordered the country’s trade negotiators to return to Ottawa.“Last-minute changes in the U.S. proposed terms were unfair, uneconomic, and called into question the reliability of any deal,” Carney said.
What triggered the sudden breakdown?
The two countries had spent three days in intensive negotiations in Washington in an effort to reach an agreement before the latest US tariff deadline.The talks had made progress on several key areas, including discussions over reducing US tariffs on Canadian-built vehicles from 25% to 15% and cutting tariffs on Canadian steel and aluminium from 50% to 25%.However, major differences remained.Washington wanted Canada to dismantle what the US considers discriminatory barriers to American exports, including restrictions involving US alcohol, dairy market access and vehicle trade.Canada, meanwhile, continued to maintain retaliatory measures imposed in response to US tariffs and sought broader protection for its businesses from new American duties.Carney said the latest US proposals did not meet Canada’s objectives, which included preserving tariff-free access to the US market for most Canadian businesses, reducing American tariffs on key Canadian industries, protecting small and medium-sized businesses and maintaining Canada’s economic independence.“However, that progress has not been enough to meet our objectives for Canadians. As a result, this evening, I have decided to suspend trade negotiations with the US and have directed Canada’s negotiators to return to Ottawa.”
Why the tariff deadline matters
The suspension comes as the US prepares to impose 50% tariffs on roughly $28 billion of Canadian goods, according to the Canadian government.A senior Trump administration official said the duties would take effect at 12:01 a.m. EDT on Saturday and would apply to nearly $20 billion of Canadian imports.US Trade Representative Jamieson Greer accused Canada of refusing to finalise a deal despite what Washington described as a favourable offer.“Tonight, Canada declined to finalize the trade deal under the terms agreed earlier this week. Despite the US 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,” Greer said in a statement read to reporters shortly before midnight.Greer said Canada had continued retaliatory measures against US goods and sought additional concessions from Washington.The Trump administration has invoked Section 338 of the Tariff Act of 1930, a rarely used provision that allows the president to impose duties of up to 50% on imports from countries deemed to have subjected US commerce to unequal or discriminatory treatment.The tariffs, originally scheduled to take effect earlier, were paused to give negotiators additional time to reach an agreement.
Canada threatens matching tariffs
Carney said Canada would respond to the new US duties with matching tariffs.“At midnight tonight, the US intends to impose a 50% tariff on roughly $28 billion of Canadian goods. Canada will match those tariffs dollar for dollar to protect our workers and businesses.”The Canadian government also plans to introduce additional measures to support workers and businesses, building on nearly C$25 billion in support provided over the past 18 months.The sudden collapse of the talks threatens to further disrupt supply chains across North America, particularly in industries that rely heavily on cross-border trade.The economic stakes are high. The United States and Canada exchanged about $880 billion worth of goods and services last year, underscoring the scale of their deeply integrated economies.
Canada says it will reduce US dependence
Carney said Ottawa would continue its strategy of reducing Canada’s economic dependence on the US by strengthening domestic industries and expanding trade with other countries.Canada’s existing free-trade agreements provide preferential access to 1.5 billion consumers, and the government expects to double that market access by the end of the year.“That strategy is working. We are advancing nearly $500 billion in major infrastructure projects. In parallel, we are unlocking new export markets for Canadian businesses. Our existing free trade deals already provide Canada with preferential access to 1.5 billion consumers, and we are on track to double that market access by the end of this year.”The Canadian government said it was seeking a fair agreement rather than a deal at any cost.“Throughout, our goal has been to secure the best deal for Canadians, never a deal at any price or on any deadline.”Carney also said Canada recognised that its relationship with the US had fundamentally changed.“We have recognised from the beginning that America has changed, and that we will not return to our old relationship. Our government understood, before many, that America is altering all its trade relationships. Putting tariffs on its closest allies and charging for access to its vast market.”
What happens next?
For now, the trade negotiations are at an impasse, with no further talks scheduled between the two countries.The immediate focus will be on the new US tariffs and Canada’s promised dollar-for-dollar response.The breakdown also exposes a widening gap between Trump’s assessment of the negotiations and Ottawa’s view of the latest US proposals. While Trump said the deal was moving forward and pointed to his “good relationship” with Carney, Canada concluded that Washington’s latest terms were unacceptable.The latest dispute marks another escalation in trade tensions between the two neighbours, despite decades of close economic and political cooperation.Carney said Canada would continue pursuing new markets rather than relying on the US.“Canada has what the world wants. And we will not allow any nation to determine our future. We will set our own course to keep building Canada strong for all.”
