Trade negotiations between the United States and Canada have broken down, increasing the possibility of a renewed tariff battle between the two North American neighbours.
The talks ended late Friday after Ottawa rejected what Washington described as the final conditions for an agreement that would have prevented the imposition of broad new tariffs on Canadian imports.
The collapse followed several days of negotiations that US officials had suggested were progressing towards a deal. Canada has now indicated that it could retaliate if Washington proceeds with additional tariffs.
US Trade Representative Jamieson Greer accused the Canadian government of walking away from the negotiating process after the two countries had made considerable progress.
According to Greer, Canada introduced fresh demands and withdrew from some commitments reached during the discussions, disrupting the balance that had been negotiated.
Canadian Prime Minister Mark Carney disputed Washington’s version of events, arguing that the final conditions came from the US side and could not be accepted by Ottawa.
Carney described the demands as “unfair, uneconomic, and called into question the reliability of any deal.”
The Canadian leader acknowledged that the negotiations had achieved substantial progress but maintained that the proposed agreement did not adequately protect Canadian interests.
The main disagreements reportedly centred on the proposed tariffs and their impact on key Canadian exports, including automobiles, steel, aluminium and lumber.
Washington had offered what Greer characterised as preferential treatment for Canada compared with other major exporters to the US, but negotiators were unable to resolve the remaining differences.
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The breakdown could further strain economic relations between the neighbouring countries, whose industries and supply chains are heavily interconnected, particularly in the automotive and manufacturing sectors.
Canada’s possible retaliatory tariffs could also trigger another response from President Donald Trump’s administration. A US official indicated that Washington was prepared to take action if Ottawa imposed countermeasures.
The US Customs and Border Protection had already issued guidance to importers shortly before the talks collapsed, outlining tariff requirements for certain Canadian products.
The failed negotiations leave both governments facing immediate economic and diplomatic challenges. Canada must now consider measures to shield affected industries and consumers from potential US tariffs, while the Trump administration faces the prospect of further disrupting trade with one of America’s biggest economic partners.