US-CANADA TRADE WAR ESCALATES
Trump imposes 50% tariff on some goods after talks fail
The ArcelorMittal Dofasco steel plant is seen via drone Thursday in Hamilton, Ontario, Canada. The United States imposed 50% tariffs on some Canadian goods Saturday.
ECONOMY
WASHINGTON — The United States imposed 50% tariffs on some Canadian goods Saturday after the two longstanding allies failed to reach a trade deal, with each side accusing the other of derailing days of talks.
The tariffs that took effect just after midnight on about $20 billion of Canadian goods — things like wooden ice hockey sticks that are rarely used anymore — are far from an economic game-changer for the largest U.S. trading partner after Mexico. That represents just more than 5% of Canada's exports to the U.S.
However, the new tariffs mark an increase in tensions between President Donald Trump and Prime Minister Mark Carney, and likely will make broader talks to renew the U.S.-Mexico-Canada free trade agreement more difficult.
"I have decided to suspend trade negotiations with the U.S. and have directed Canada's negotiators to return to Ottawa," Carney said in a statement.
"They (negotiators) have worked hard, in good faith, to defend the interests of Canadians throughout these negotiations up until the very last minute," he said. "However, last-minute changes in the U.S. proposed terms were unfair, uneconomic, and called into question the reliability of any deal."
He later announced Canada's countermeasures against the U.S. would take effect Sept. 9, with details to be released in coming days. He also noted Canada will provide tariff protection, where relevant, for some industries.
"Canada will match Washington's new tariffs, dollar for dollar, in order to protect Canadian workers, farmers, families and businesses," he said at a news conference. "Our response will be concentrated in sectors such as steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics."
Carney, the only person to ever run the central banks of two major economies, was elected last year on promises to stand up to Trump, and remains broadly popular. Polls show most Canadians oppose making concessions to Trump.
Noting a "prominent justification for U.S. tariffs has been their claim that since the United States runs, quote, 'a trade deficit with Canada,' 'We were ripping them off,' also a quote. But the U.S.'s narrow merchandise trade deficit only exists because the U.S. buys so much of its energy from Canada," Carney said at his news conference. "Canada fuels American growth, supplying 99% of their natural gas imports, 85% of their electricity imports, 60% of their crude oil imports. I don't think they want us to stop sending any of that energy."
Hours earlier, the two sides seemed close to an agreement that sources said would have lowered tariffs on steel, aluminum and autos and potentially brought American alcohol back to Canadian liquor stores.
"Tonight, Canada declined to finalize the trade deal under the terms agreed earlier this week," U.S. Trade Representative Jamieson Greer said during a White House briefing.
"This is a missed opportunity for Canada to partner with the United States, which is the fastest-growing economy in the G7," Greer said.
A senior Trump administration official said the U.S. offer would have put Canada in the best tariff position of any major exporter to the U.S., but Canada sought additional concessions, especially on steel, aluminum, autos and softwood lumber.
"We've consistently proposed long-term partnerships, while America has often pursued short-term transactions. The gap between partnership and competitor, unfortunately, has remained too wide in recent days. So last evening, I instructed our negotiators to return to Ottawa," Carney said at his news conference. "We cannot accept what they've offered, and we will not give what they've asked.
No additional talks are scheduled as the U.S. implements the new duties, the official said.
Trump last month threatened to impose a raft of duties on a range of Canadian imports including wine, furniture, dairy products, cement, clothing, fishing rods and hockey equipment.
The tariffs, which do not qualify for preferential treatment under the U.S.-Mexico-Canada free-trade agreement, open up some already vulnerable sectors to potential severe damage that could lead to job losses and business closures, trade experts previously said.
The decision by the U.S. administration followed three days of talks in Washington between Canada's minister for trade with the U.S., Dominic LeBlanc, and Greer.
The new duties add to existing U.S. tariffs on steel, lumber and autos, which took a major hit in the past 18 months, though the malaise was largely contained within these sectors.
