US, Canada fail to reach a tariff deal to avert looming trade war

The US and Canada failed to reach a trade deal late on Friday (US time), and Washington announced it will impose 50 percent tariffs on about US$20 billion worth of Canadian goods, effective just after midnight on Saturday. This marks an escalation of tensions between the two long-time allies. Canada's Prime Minister Mark Carney suspended trade negotiations and threatened dollar-for-dollar retaliation. The decision followed three days of talks in Washington between Canada's trade minister, Dominic LeBlanc, and US Trade Representative Jamieson Greer. Carney stated that last-minute changes in US proposed terms were deemed unfair, uneconomic, and undermined the reliability of any deal. While the new tariffs target a small share of Canadian exports, they add to existing US tariffs on steel, lumber, and autos. These measures could hinder Canada's economic recovery and affect broader negotiations for a free-trade pact between the two countries, regardless of preferential treatment under the US-Mexico-Canada Agreement.