US, Canada fall deeper into trade war with new tariffs as talks collapse

The United States and Canada, historic allies along an undefended border, fell deeper into a trade war Saturday marked by angry recriminations and new tariffs that are expected to raise prices for products in both countries.

Each side blamed the other for the collapse of negotiations in Washington late Friday, leading the US to impose 50 per cent tariffs on $20 billion worth of Canadian goods and Canada setting September 8 as the start of its retaliatory penalties.

President Donald Trump's import taxes will hit about 5 per cent of what Canada ships to the United States every year, ranging from hockey sticks to tongue depressors. Prime Minister Carney said Ottawa would respond with targeted tariff protection for industries exposed to the new US duties, including some steel products. He also mentioned the dairy, appliance, agricultural equipment, pulp and paper and electronics sectors.

No further talks were planned. Whatever the eventual outcome, a loss of trust seems one of the earliest casualties.

Carney accused Washington of using "economic integration as a weapon" and said "its signature was written in pencil." Resorting to the language of battle, he said his country had been "attacked" by the new American tariffs. "You're at war when you get attacked," he said, adding that Canada had the reserves, resilience and plan to respond.

But to Trump's chief trade negotiator, Jamieson Greer, the US was compelled to act after a year of retaliation by its longtime partner.

"We've said enough, and so we've taken countermeasures. Our interest is in protecting American workers and protecting American supply chains," the US trade representative told "Fox & Friends Weekend."

Carney said Canada had been willing to drop remaining retaliatory tariffs on steel, aluminum and autos if the US substantially lowered its own, and to encourage provinces to restore US alcohol sales. But he said Washington's final demands went too far. "They asked too much and offered too little," Carney said.

Greer said the Republican administration was offering to cut tariffs on steel, autos and lumber, "things that are sensitive for them. And they've always had the best deal, and they still would have an even better deal, but they didn't want that." As a result, he said, "We're moving forward with measures that respond to Canadian retaliation." Carney said the US added last-minute terms that would have reduced tariff relief for Canadian-made vehicles, restricted Canada's ability to strike trade deals with other countries and weakened protections for language, culture and sovereignty.

He said such demands were "unacceptable." The breakdown in negotiations marked a sharp reversal from two days earlier, when officials from the two countries sounded as if they were headed toward a compromise.

Ontario Premier Doug Ford, who leads Canada's most populous province, praised Carney for rejecting the deal, saying it would have hurt Ontario's auto, steel and manufacturing sectors.