U.S., Canada both raise tariffs after trade talks break down

The United States levied 50% tariffs on roughly $20 billion in Canadian goods after trade negotiations between the two countries broke down over the weekend. The tariffs apply to most types of goods, with exceptions for energy and some critical materials. U.S. Trade Representative Jamieson Greer said Canada refused to finalize terms agreed upon last week, despite favored treatment and a U.S. offer of lowered tariffs on some metals, autos, and lumber. President Donald Trump similarly said that Canada wanted the benefits of being a U.S. state without actually being one. He also said that Canada for years levied high tariffs on products from U.S. farmers. That would end, he said.

Canada, in return, pledged to raise its tariffs until they matched the U.S. measures dollar for dollar. Prime Minister Mark Carney said his new tariffs would mainly apply to U.S. steel, dairy, appliances, agricultural equipment, paper, and electronics. The tariffs would come into force on the Tuesday after Labor Day, Carney said. Although neither side’s tariffs appear to apply to energy, Carney also reminded the United States that it was dependent on Canada for 99% of its natural gas imports and the majority of its electricity and crude oil imports. In a Saturday address, Carney insisted that America had fundamentally changed, and that the two countries would not return to their old relationship.

Why did talks break down? Both sides accused the other of making last-minute demands and changes during negotiations. Neither offered details on which changes were proposed.

Dig deeper: Read my report on the details of the new U.S. tariffs on Canada.