U.S. tariffs on Canada take effect after trade talks collapse

New 50% U.S. tariffs on approximately $20 billion worth of Canadian goods came into effect on Saturday following the collapse of last-minute trade talks, as Canadian Prime Minister Mark Carney vowed reciprocal retaliation, according to Bloomberg. The duties apply to numerous Canadian products, including plywood, alcoholic beverages, electrical equipment, and hockey gear.

Carney stated Canada would respond "dollar for dollar" to safeguard domestic workers and businesses. Both nations accused each other of causing the agreement breakdown. U.S. Trade Representative Jamie Greer cited new Canadian demands and reversals of earlier commitments as factors disrupting the balance reached during multiple days of negotiations.

Carney accused Washington of making unfair, economically damaging last-minute changes and casting doubts on the reliability of any agreement. The trade war escalates tensions between the countries, which exchanged nearly $900 billion in goods and services last year. President Donald Trump announced a deal just two hours before the tariffs were set to begin on Saturday, but Canadian officials later revealed several key issues remained unresolved.

Washington had offered to reduce U.S. tariffs on certain Canadian steel and aluminum items to 25% from 50%, and lower duties on Canadian automobiles to 15%. Canada had also removed retaliatory measures imposed last year, including tariffs on U.S. vehicles. Moreover, the U.S. sought an end to provincial restrictions on retail sales of American alcoholic beverages.

Under a previously unused section of the Tariff Act of 1930, the new tariffs were imposed to retaliate against what the U.S. deemed as Canada's discriminatory treatment of U.S. commerce. Major Canadian natural-resource exports, such as crude oil, potash, and critical minerals, are exempt. Canada supplies the United States with over 4 million barrels per day of crude oil and petroleum products.

Carney ruled out restricting natural-resource shipments, asserting that Canada aims to remain a dependable supplier. Nevertheless, Ottawa has been evaluating additional retaliatory measures, given strong domestic support for responding to the U.S. tariffs.