US, Canada fail to reach trade pact as Trump’s 50% tariffs take effect

Hefty US tariffs on some Canadian products took effect on Saturday after days of last-minute negotiations failed to produce a trade agreement between Washington and Ottawa.

Canadian Prime Minister Mark Carney vowed that Canada would match the US tariffs “dollar for dollar to protect our workers and businesses”, after officials confirmed late Friday that the two sides had failed to reach a deal.

50% tariffs take effect

The failure to reach an agreement means new 50 per cent tariffs on some Canadian products took effect on Saturday, affecting about $20 billion worth of Canadian exports to the United States.

US Trade Representative Jamieson Greer said Friday that Canada had declined to finalise a trade agreement based on terms discussed earlier in the week.

He said Washington had offered tariff reductions covering sectors including steel, aluminium, autos and lumber in exchange for concessions from Canada.

Canada rejects last-minute US terms

The announcement came despite US President Donald Trump saying the two countries “should be able to have a deal with Canada”, citing his good relationship with Carney.

After several hours of talks on Friday, however, Canada's top negotiator Dominic LeBlanc said the two sides still had “more work to do”.

Carney said last-minute changes to the US proposal were “unfair, uneconomic” and raised questions about the reliability of any future agreement.

Dispute over US products

The White House has accused Canada of “discriminatory treatment” of US products, including alcohol, automobiles and dairy goods.

Canadian regional leaders said Washington was particularly angered by Canada's decision to remove US alcohol and wine from liquor stores as part of its retaliatory measures.

The new tariffs had initially been scheduled to take effect on Wednesday, but Trump delayed them by three days, citing progress in negotiations.

Canada seeks to reduce US dependence

Canada has been seeking relief from US tariffs on autos, steel and aluminium, which have weighed on its economy, contributed to job losses and strained the traditionally close trading relationship between the two countries.

Carney has repeatedly warned that Canada's relationship with the US has been permanently changed and said Ottawa needs to diversify its trade.

The United States currently accounts for about 70 per cent of Canadian exports.

USMCA talks still ahead

The latest tariff dispute comes as Washington and Ottawa also face negotiations over the United States-Mexico-Canada Agreement (USMCA).

The two countries still need to agree on revisions to the North American trade pact after Trump declined to renew it last month.