Trump hits Canada with 50% US tariffs, Carney vows ‘dollar for dollar’ retaliation

The two sides were locked in negotiations for weeks and had worked on a draft deal that included reducing tariffs on certain Canadian steel and aluminium to 25 per cent and cutting duties on Canadian autos to 15 per cent.

How did Canada respond?

Prime Minister Mark Carney said he had suspended negotiations and ordered Canada’s negotiating team to return to Ottawa. In a statement, he said: “I have decided to suspend trade negotiations with the US and have directed Canada’s negotiators to return to Ottawa.” He added that Canadian negotiators had “worked hard, in good faith, to defend the interests of Canadians throughout these negotiations up until the very last minute,” but that “last-minute changes in the US proposed terms were unfair, uneconomic, and called into question the reliability of any deal.”

My statement on Canada-U.S. trade negotiations: pic.twitter.com/65OuQH40ra

— Mark Carney (@MarkJCarney) August 22, 2026

Carney confirmed Canada would “match those tariffs dollar for dollar to protect our workers and businesses,” and said his government would announce further support for Canadian workers and businesses in the coming days. No further talks have been scheduled.

Why did talks collapse?

Canada had been seeking relief from existing US tariffs on steel, aluminium, autos and lumber, which the US was unwilling to provide, a senior Trump administration official told reporters.

US Trade Representative Jamieson Greer said in a statement read to reporters shortly before midnight: “Tonight, Canada declined to finalize the trade deal under the terms agreed earlier this week.” He said new demands and reversals from Canada had disrupted the balance reached in recent days, despite what he called a US offer giving Canada the best treatment of any major exporter to the US market. Greer described the offer as “forward-looking” and said it included “a historic economic and national security partnership.”

What products are affected?

The tariffs cover a wide range of Canadian goods, including:

• Alcoholic beverages beer, wine and spirits are a major target, reflecting Trump’s complaints about Canadian restrictions on US alcohol.
• Dairy products including items affected by Canada’s dairy-market protections.
• Hockey equipment including hockey sticks and related sporting goods.
• Cement and other construction-related products.
• Wood and forest products some Canadian wood products are included, although separate forest-product tariffs already exist.
• Medical and industrial products notably items such as tongue depressors.
• Other manufactured and consumer goods covered under detailed tariff schedules.

How big is the trade relationship at stake?

The two countries sold each other $880 billion worth of goods and services last year. The tariffs were originally due to start at 12:01 a.m. on Wednesday, but Trump extended the deadline by three days to allow more time for talks, which still did not produce an agreement.

The new tariffs apply regardless of whether Canadian goods would normally qualify for preferential treatment under the US-Mexico-Canada Agreement (USMCA), which has protected much of Canadian industry from earlier US tariffs.

What does this mean for the wider US-Mexico-Canada trade pact?

The breakdown comes as the US, Mexico and Canada attempt to renew the USMCA, a trade agreement from Trump’s first term. The US has already begun formal talks with Mexico on updating the deal, but talks with Canada have not started, and the growing trade conflict raises doubts about when, or whether, they will.

Public frustration has grown. A petition calling for the removal of US Ambassador Pete Hoekstra, a Trump ally, has gathered close to 248,000 signatures since July 21, accusing him of helping normalise Trump’s talk of annexing Canada.

Candace Laing, president and CEO of the Canadian Chamber of Commerce, called the tariffs “a body blow to North American competitiveness,” warning they would raise costs for Americans while threatening Canadian customers, investment and small businesses.

Nearly 72 per cent of Canada’s goods exports last year went to the United States. The Trump administration may also have been cautious about imposing a large new tariff, since the cost is typically paid by US importers who pass it on to consumers through higher prices, at a time when American voters are already frustrated by the cost of living ahead of November’s midterm elections.

(With inputs from Reuters and AP)