Canada demand for trucks tariff relief imperiled trade talks

U.S. and Canadian trade talks ended in failure on Friday due to disagreements over tariff relief for medium- and heavy-duty vehicles, according to sources familiar with the negotiations. Both countries were close to an agreement that would have reduced sectoral tariffs on autos, steel, aluminum, and lumber, but could not reach an accord on the treatment of larger vehicles.

Canadians demanded extended relief, while Americans refused, arguing the request was an additional demand outside the deal. Canadian Prime Minister Mark Carney called denying relief to trucks "a big change" and highlighted the impact on Ford's plant in Ontario, which manufactures larger pickup trucks. The U.S. considered this request as a separate demand that was not part of the initial deal.

Meanwhile, one Canadian industry official suggested the U.S. was the one who attempted to exclude super-duty pickup trucks from the reduced tariff classification. In response, Canada announced counter-tariffs on American goods starting September 8, dollar-for-dollar with the U.S. imposition of new 50% tariffs on approximately $20 billion worth of Canadian products.

Autoworkers' unions expressed concern that granting tariff relief to U.S. parts would open the door to further demands, potentially undermining Canada's competitive position in the wider North American trade pact.