Canada vows 'dollar-for-dollar' retaliation as US trade talks collapse

Trade negotiations between the US and Canada broke down minutes before a Friday-night deadline, triggering a new round of 50% US tariffs on roughly 5% of Canadian exports — wine, dairy, cement, clothing and hockey equipment among them. Prime Minister Mark Carney suspended talks and recalled his negotiators to Ottawa, saying last-minute US changes to the proposed terms were ‘unfair, uneconomic’ and undermined confidence in any deal. Washington’s trade representative countered that Canada had walked back earlier commitments and rejected ‘the best treatment of any major exporter’ to the US market. Carney pledged reciprocal, dollar-for-dollar tariffs in response.

The collapse is a sharp reversal from earlier in the week, when both sides signaled a deal was near — reportedly one that would have cut steel and aluminium tariffs from 50% to 25% and auto tariffs from 25% to 15% in exchange for Canada restoring US alcohol to store shelves and easing dairy quotas. The new levies, imposed under the Depression-era Tariff Act of 1930, stack on top of existing US tariffs on Canadian steel, aluminium, autos and lumber, straining one of the world’s most integrated trading relationships; Canada sends about 70% of its exports south.

The economic stakes are significant. One analysis estimates the tariffs could cost Canada 90,000 jobs, with financial forecasts projecting a 0.3%–0.6% hit to GDP. Business groups, including the Canadian Chamber of Commerce, warned of a ‘body blow to North American competitiveness,’ while provincial leaders in hard-hit Ontario, Quebec and British Columbia backed a firm response. The standoff is now a major test of Carney’s premiership, with polls showing Canadians split between retaliation and continued negotiation.