U.S. And Canada Fall Deeper Into A Trade War With New Tariffs As Talks Collapse

The United States imposed 50% tariffs on $20 billion worth of Canadian products early Saturday, and Canada immediately said it would retaliate after last-ditch negotiations failed to resolve the latest strain in relations between the historic allies. "Canada will match those tariffs dollar for dollar to protect our workers and businesses," Prime Minister Mark Carney said in a statement. The retaliation escalates the trade conflict and calls into question the future of a North American trade agreement covering the United States, Canada and Mexico that is crucial to industry in all three countries. Canada sought concessions on tariffs on steel, aluminum, autos and lumber that Washington was unwilling to provide, a senior Trump administration official told reporters. "Tonight, Canada declined to finalize the trade deal under the terms agreed earlier this week." Carney blamed the Republican administration for the breakdown, saying "last-minute changes in the U.S. proposed terms were unfair, uneconomic, and called into question the reliability of any deal." He said he had suspended negotiations and directed Canada's negotiating team to return to Ottawa. No further talks are planned. The breakdown in negotiations marked a sharp reversal from two days earlier, when officials from the two countries sounded as if they were headed toward a compromise. Carney said Canada's goal throughout the negotiations had been to secure the best possible agreement, "never a deal at any price or on any deadline." Ontario Premier Doug Ford, who leads Canada's most populous province, backed Carney's response, saying the prime minister had his "full support" for retaliation "tariff for tariff, dollar for dollar" and that "everything needs to be on the table." The tariffs were initially supposed to kick in at 12:01 a.m. Wednesday. The U.S. and Canada have wrangled for decades over trade, poking each other over sore spots such as Canadian softwood lumber imports and U.S. access to Canada's protected dairy market. Trump's approach to dealing with Canada marks an extraordinary departure from the traditionally cooperative relationship between the two countries. Trump has imposed tariffs on Canadian goods in a push to bring manufacturing back to the United States and made inflammatory comments about turning Canada into America's 51st state. Carney said Canada had recognized that "America has changed" and that the two countries would "not return to our old relationship." To punish Canada, he reached back to the Great Depression, invoking Section 338 of the Tariff Act of 1930 to threaten 50% tariffs on products that account for about 5% of Canadian exports to the United States. Nearly a century ago, with the U.S. and world economies in collapse, Congress passed the 1930 tariff law, imposing taxes on imports from around the world. "Canada told the Americans in advance that if these tariffs landed, it would stop negotiating and retaliate,'' said Barry Appleton, senior fellow at the Center for International Law at New York Law School.