Prime Minister Mark Carney and U.S. President Donald Trump speak at the G7 working luncheon, June 16.Christopher Katsarov/The Canadian PressOttawa retaliates…
Prime Minister Mark Carney and U.S. President Donald Trump speak at the G7 working luncheon, June 16.Christopher Katsarov/The Canadian Press
A months-long effort to strike a new trade agreement between Canada and the United States collapsed late Friday night, ending in mutual recrimination, a fresh round of steep American tariffs, and a promise from Prime Minister Mark Carney that Canada would respond "dollar for dollar." The breakdown, coming just hours before a midnight deadline and days after President Donald Trump had declared "we have a deal," has plunged the two closest trading partners in the world into their most serious economic rupture in generations.
For much of last week, negotiators from both countries appeared close to a deal that would have eased tariffs on Canadian steel, aluminum and automobiles in exchange for Canada dropping its own retaliatory measures on American dairy and lumber. But by Friday evening, Carney recalled Canadian negotiators to Ottawa and announced he was walking away, saying the Americans had introduced last-minute changes that were "unfair, uneconomic," and that called into question "the reliability of any deal" Washington might sign.
Carney pointed to three sticking points. The U.S. refused to extend tariff relief to medium- and heavy-duty vehicles, a stance Canadian officials said would hit plants like Ford's Oakville facility and GM's Oshawa truck line. In the final hours, U.S. negotiators pushed language restricting Canada's ability to strike independent trade deals with other countries — which Carney called simply "unacceptable." And American negotiators sought to weaken protections for the French language and Quebec culture, which he framed as a matter of "our sovereignty."
"Canada has what the world wants," Carney told reporters. "And we will not allow any nation to determine our future." He said Canada had entered the talks seeking to preserve tariff-free access for most Canadian businesses, protect small and medium-sized enterprises, and secure relief for strategic industries — and that the U.S. offer asked too much while giving too little.
Washington told a different story. U.S. Trade Representative Jamieson Greer said Canada had "declined to finalize the trade deal under the terms agreed earlier this week," accusing Ottawa of "new demands and walk-backs of other commitments" that "upended the careful balance reached in the past days" — calling it "a missed opportunity for Canada." Trump was blunter, writing on Truth Social that "Canada wants the benefits of being a State, without being one," and that Canada had "charged our great farmers... massive amounts of Tariffs. No more!!!"
Within hours, the U.S. imposed a 50 percent tariff on roughly $20–28 billion worth of Canadian goods, including dairy, alcohol, cement and hockey equipment, while exempting energy, potash and critical minerals — the first use of Section 338 of the Tariff Act of 1930 since its enactment nearly a century ago.
Prime Minister Mark Carney and Dominic LeBlanc, Minister responsible for Canada-U.S. Trade, arrive at a press conference in Ottawa, Ontario, on Saturday after trade talks with the U.S. collapsed. DAVE CHAN/AFP/Getty Images
Carney did not wait long to respond. Canada will impose retaliatory tariffs beginning September 8, matching the American measures "dollar for dollar" on U.S. steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics. "We cannot accept what they've offered, and we will not give what they've asked," Carney said, framing the move as a defence of Canadian workers and businesses rather than an escalation. Ottawa says further tariff details and industry support measures, potentially lasting years, will follow within days.
The stakes are considerable on both sides of the border. Canada supplied about 23 percent of U.S. steel imports and 53 percent of its aluminum imports last year, with roughly 90 percent of those exports destined for the American market — much of it feeding U.S. automakers already facing rising costs. Total trade between the two countries reached $376 billion in the first half of 2026 alone. Notably, opposition to a broader trade war is also building among American business groups and lawmakers, a sign the economic pain isn't one-sided.
At home, the collapse drew sharp political reaction. Conservative Leader Pierre Poilievre said "Canada cannot accept one-sided tariffs that will deindustrialize our country," while the party's Canada-U.S. relations critic, Shuvaloy Majumdar, pressed the government to release the full text of the draft agreement and the terms under which tariffs would have lifted. Conservatives have also questioned concessions they say Carney's government made before formal talks even began. Ottawa has kept many details confidential, saying it didn't want to "tip its hand" to American negotiators — a stance likely to face continued pressure.
The key date to watch is September 8, when Canada's retaliatory tariffs take effect. Before then, Ottawa is expected to publish its finalized target list and unveil support programs for the industries most exposed — auto, steel, aluminum and agriculture.
Whether talks resume remains uncertain. Carney says Canada is willing to return "when appropriate," but won't sign a deal that compromises its sovereignty or its ability to diversify trade beyond the U.S. — a strategy tied to roughly $500 billion in planned infrastructure investment and expanded trade access to markets covering 1.5 billion consumers outside North America. For now, both sides appear dug in, and Canadians can expect higher prices on some cross-border goods, continued political sparring over blame, and close attention on whether renewed pressure brings negotiators back to the table before fall.
