Canada-U.S. trade talks collapsed over disputed deal terms, Carney’s envoy says

U.S.-Canada trade talks collapsed over a range of issues where the written text of a potential deal was at odds with what the Canadian side believed it had agreed to, Prime Minister Mark Carney’s top U.S. envoy says.

Mark Wiseman, Canada’s ambassador to the U.S., said in an interview Sunday that there was no one issue that led talks to collapse late Friday, a development that triggered new tariffs and a potentially escalating trade fight.

Wiseman likened the negotiations to a handshake deal to buy a house — only for the prospective buyer to learn appliances weren’t included, the furnace had no warranty and neither the garage nor yard is on the same property, and ultimately walk away.

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“As we drilled down, what we discovered was that what our understanding of what had been agreed to was quite different from what was showing up in the documents,” he said. “When that kind of happens once or twice, it’s kind of understandable, but when it happens consistently, and every interpretation is the most negative interpretation” then it “got to a point” where they walked away.

Wiseman’s comments come as the countries grapple with the sudden, jarring collapse of trade talks on Friday. The U.S. proceeded to apply a 50 per cent tariff on about US$20 billion in Canadian goods, and Carney announced retaliation that will take effect on Sept. 8. The U.S. is pledging to escalate if he proceeds.

The Canadian dollar was quoted as much as 0.5 per cent weaker as currency markets reopened in Asia, underperforming major peers. The move pared last week’s 0.8 per cent rally that stemmed from a weaker greenback and indications that the two sides were nearing a deal.

“News over the weekend is certainly CAD negative and I think we will see plenty of volatility in the currency, especially once North America comes in and we get further expected comments from both sides,” said Nick Twidale, chief market analyst at AT Global Markets.

“However, moves won’t be too excessive as we’ve all seen this movie before over the last couple of years, so I’m expecting some sort of a deal or resumption of trade talks to be announced during the week,” he said.

It’s not clear whether negotiations will take place between now and then, but Wiseman said the timeline is not about creating an overtime period for talks. “I don’t think it should be viewed that way,” he said.

Talks were bogged down in particular on a dispute over tariff treatment of medium and heavy vehicles, on which the U.S. was resisting cutting tariffs. Wiseman said Canada “needed medium and heavy duty vehicles to be included” in tariff relief. The issue affects General Motors Co. and Ford Motor Co., two U.S. automakers operating in Canada, he said.

“That’s just something we could not accept because we want to protect the existence of an automotive assembly industry in Canada for cars, light trucks, you know, medium trucks and heavy-duty trucks.”