Prime Minister Mark Carney suspended Canada-US trade negotiations late Friday after last-minute American demands convinced Ottawa that the proposed agreement was unfair and unreliable.
Carney ordered Canada’s negotiating team home from Washington shortly before a new 50 per cent US tariff took effect on roughly $28 billion worth of Canadian goods. The duties apply to products that had previously entered the American market tariff-free under the Canada-US-Mexico Agreement.
“Last-minute changes in the US proposed terms were unfair, uneconomic, and called into question the reliability of any deal,” Carney said in an Aug. 21 statement.
US Trade Representative Jamieson Greer blamed Canada for the collapse, accusing Ottawa of making new demands and reversing earlier commitments. Neither government disclosed the outstanding disagreements.
Ottawa will retaliate with tariffs on $28 billion worth of American goods, matching the US measures dollar for dollar. Carney also promised more assistance for affected workers and businesses, adding to nearly $25 billion in federal support announced during the 18-month trade conflict.
Canadian exporters hit by the duties face lost sales, production cuts and pressure to move investment to the United States. The damage could spread through domestic supply chains as affected companies reduce orders, delay projects and lay off workers.
The failed negotiations mark another break in a relationship that Canadian governments and businesses once treated as the dependable foundation of the national economy. Carney said the United States has changed and Canada will not return to its old relationship with Washington.
The two countries will keep talking. Greer said they will proceed with the scheduled review of CUSMA, which remains in force despite the new tariffs and Canada’s retaliation.
The legality of Trump’s tariffs is also likely to be tested. Georgetown University trade-law scholar Jennifer Hillman told Energi Media that Section 338 of the Smoot-Hawley Tariff Act permits duties designed to offset discrimination against American goods. Trump’s tariffs cover products unrelated to the disputes cited by his administration and could collect far more than the economic harm Washington alleges.
American importers have the clearest standing to challenge the duties in the US Court of International Trade because they pay the tariffs. Canadian exporters may also be able to sue, while Canada’s ability to bring its own case in a US court remains unresolved.
Carney said Canada will pursue new markets and invest in major domestic projects to reduce its dependence on the United States. That transition will take years. Canada has lost industrial capacity over the past quarter-century, while overseas customers cannot quickly replace the American market.
“We will not allow any nation to determine our future,” Carney said. “We will set our own course to keep building Canada strong for all.”
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