Trade negotiations between the United States and Canada have collapsed, raising fears of a renewed trade war between the two North American neighbours.
The talks broke down late Friday after Canada rejected what Washington described as the final terms of an agreement aimed at preventing sweeping new tariffs on Canadian imports.
The development, first reported by The New York Times, came as the administration of US President Donald Trump prepared to introduce new levies on Canadian goods from early Saturday.
US Trade Representative Jamieson Greer accused Ottawa of abandoning the negotiating process after the two sides had made significant progress towards an agreement that would have provided Canadian exports with preferential access to the US market.
Greer said Canada had introduced new demands and reversed some commitments reached during negotiations.
Canadian Prime Minister Mark Carney, however, rejected Washington’s account. He said the final conditions came from the US side and were unacceptable to Canada, describing the demands as “unfair” and “uneconomic”.
Carney acknowledged that the negotiations had achieved considerable progress but said the outcome did not provide enough protection for Canadian interests.
Tariffs threaten key industries
The immediate disagreement centres on the scale and scope of the proposed US tariffs, with automobiles, steel, aluminium and lumber among the Canadian sectors facing major uncertainty.
Washington had offered what Greer described as the most favourable treatment available to any major exporter to the US, but the two governments failed to resolve their remaining differences.
The collapse could deepen an already damaging economic confrontation between the two countries, whose economies are closely connected through extensive cross-border supply chains.
The automotive industry is particularly exposed, with manufacturing networks spanning both sides of the US-Canada border.
Canada has threatened to retaliate if the new US tariffs are imposed. A US official also warned that Washington could respond to any Canadian counter-tariffs, raising the possibility of another cycle of escalating measures.
The threat of renewed tariffs had already affected preparations at the US border. Shortly before Greer announced the collapse of the negotiations, US Customs and Border Protection issued guidance to importers on tariffs covering Canadian products identified by the administration.
The breakdown leaves both governments facing an immediate economic and diplomatic challenge, removing what had appeared to be a possible route towards easing tensions.
For Carney’s government, the next steps are expected to focus on protecting Canadian industries from the new levies while managing potential effects on businesses and consumers.
For Trump, the collapse reinforces his administration’s broader push for trading partners to make greater concessions to the United States.
