Canada says it'll match US tariffs 'dollar for dollar'
What's the story
US-Canada trade talks collapsed late Friday night, setting in motion 50% tariffs on a wide array of Canadian goods. The duties took effect at midnight. Announcing the suspension of negotiations shortly before the Friday night deadline, Canadian Prime Minister Mark Carney said he would impose reciprocal tariffs on US goods "dollar for dollar." He said "last-minute changes in the US proposed terms were unfair and uneconomic and called into question the reliability of any deal."
Talks
Trade talks had been ongoing since July
Trade talks had been ongoing since July, after President Donald Trump threatened to impose a 50% levy on nearly $20 billion (C$28 billion) of Canadian imports by August 19.
Trump had temporarily suspended the duties earlier this week, claiming the countries were close to reaching a trade deal that would be "very good" for both.
However, minutes before a deadline for a deal, Carney stated that while "important progress" had been made, it was "not enough to meet our objectives."
Trade collapse
Negotiators were discussing reducing US tariffs on Canadian steel
"As a result, this evening, I have decided to suspend trade negotiations with the U.S. and have directed negotiators to return to Ottawa," Carney said.
The breakdown in trade talks marks a major shift from earlier optimism.
Negotiators were reportedly discussing reducing US tariffs on Canadian steel and aluminum from 50% to 25%, and on Canadian autos from 25% to 15%.
In return, Canada was expected to lift its ban on US alcohol sales.
Twitter Post
Carney's statement
My statement on Canada-U.S. trade negotiations: pic.twitter.com/65OuQH40ra
— Mark Carney (@MarkJCarney) August 22, 2026
Retaliation risks
US trade representative's statement
After Carney's announcement, US trade representative Jamieson Greer said in a statement: "Tonight, Canada declined to finalize the trade deal under the terms agreed earlier this week."
"Despite the US offer to Canada to receive the best treatment of any major exporter to our market, new demands and walkbacks of other commitments by Canada have upended the careful balance reached in the past days."
His office said The tariffs impact about $20 billion worth of US imports from Canada.
Tariff escalation
US imposes new tariffs on Canadian goods
With talks breaking down, Canada will face fresh 50% US tariffs imposed by Trump under a Depression-era law known as the Tariff Act of 1930.
The new 50% tariffs will apply on a range of Canadian goods, including wine, dairy, cement, clothing, and hockey equipment.
These are in addition to existing tariffs on Canadian steel and aluminum, autos and lumber.
Trade
Leaked audio tape of Vance
According to a leaked audio tape obtained by the Canadian Press, US Vice-President JD Vance stated at a private fundraiser on Wednesday that Carney tried to "out-tough Donald Trump" during trade negotiations.
"It's hilarious because Carney presents this as some victory for Canada when fundamentally, like, they climb down on a lot of issues," Vance allegedly told the audience.
The US and Canada exchanged almost $900 billion in goods and services last year.