A hefty new tariff on a wide range of products from Canada took effect early Saturday after last-minute negotiations to avert the duties collapsed.
“Tonight, Canada declined to finalize the trade deal under the terms agreed earlier this week, despite the US offer to Canada to receive the best treatment of any major exporter to our market,” US Trade Representative Jamieson Greer told reporters.
“New demands and walk backs of other commitments by Canada have upended the careful balance reached in the past days,” he added.
The 50% tariff will apply to some $20 billion worth of Canadian products, including wine, hockey sticks, and cement.
Canadian Prime Minister Mark Carney vowed swift retaliation after negotiations failed.
“Canada will match those tariffs dollar for dollar to protect our workers and businesses,” he said in a statement.
“In the coming days, the government will introduce additional measures to support Canadian workers and businesses, building on the nearly $25 billion in support provided over the past 18 months,” Carney added.
President Trump had originally set a 12:01 a.m. Wednesday deadline for the two sides to reach terms to stave off the tariff but pushed it back to Saturday amid positive, eleventh-hour negotiations.
The new tax aims to remedy Canada’s “substantial retaliation” and “discrimination” against American products and businesses, according to Trump administration officials.
There will be exemptions for energy and essential goods like fish and critical minerals.
“We have recognised from the beginning that America has changed, and that we will not return to our old relationship,” Carney’ statement continued. “Our government understood, before many, that America is altering all its trade relationships. Putting tariffs on its closest allies and charging for access to its vast market.”
The prime minister blamed “last-minute changes in the US proposed terms” that he described as “unfair, uneconomic, and called into question the reliability of any deal” for the breakdown in talks.
In the hours leading up to the implementation deadline, Trump appeared optimistic that a deal could be finalized with Canada, touting his “good relationship” with Carney.
“The deal with Canada is moving along and we should be able to have a deal,” Trump told reporters at Joint Base Andrews, before jetting off to a rally in South Carolina.
After teasing that his administration is “starting on a new deal with Mexico” at the same time it negotiates with Canada, Trump declared: “I only make good deals. Much better deal for the United States, both with Canada and Mexico.”
The tariff was unveiled last month, shortly after Trump and Carney were spotted chatting during the World Cup final in New Jersey.
The two leaders spoke by phone Monday afternoon and discussed a potential trade deal.
″We are negotiating,” Carney said of talks with Trump, according to the Associated Press. “The negotiations are very intense and delicate. This is not the time to talk about negotiations in public.”
The Trump administration was reportedly pushing for Canada to end retaliatory measures it took against Trump’s tariffs last year, including bans on US liquor and duties on US automobiles.
When he announced the implementation delay on Wednesday, Trump also teased that an agreement to resurrect the dormant Keystone XL pipeline project may also be part of a final deal.
“The great Keystone XL Pipeline, long ago killed by Sleepy Joe Biden, may be awoken from the grave!” the president wrote on Truth Social.
Meanwhile, Canada has pressed the US to lower tariffs on automobiles and other goods, according to Politico.
Ottawa wants the US tariff on Canadian-built vehicles cut to 15% from 25% and the levy on Canadian steel and aluminum halved to 25%, Reuters reported.
“We have more work to do. We are going to continue working up until the last minute. Our job is not finished,” Canada’s Minister of Internal Trade Dominic LeBlanc said Friday as he emerged from Greer’s office, just four hours before the deadline.
LeBlanc’s office confided with Carney’s US economic advisory team earlier Friday that talks were “complex and consequential,” in an email obtained by Reuters.
“I want to be direct with you about where we stand. This is an intense moment. The stakes are significant… That pressure is being felt by Canadians across the country, and those at the table are acutely aware of it,” the email read.
Canada is the second-largest US trade partner. Nearly 72% of Canada’s goods exports last year went to the US.
However, the US goods trade deficit with Canada was $46.4 billion in 2025, according to the Office of the US Trade Representative.
Last year, Trump imposed sweeping, double-digit tariffs on virtually every country after declaring the US trade deficit a national emergency.
In February, the Supreme Court struck down the so-called “Liberation Day” tariffs, ruling the president did not have the authority under the International Emergency Economic Powers Act (IEEPA) to impose them.
For the latest round of levies against Canada, Trump invoked Section 338 of the Tariff Act of 1930 – a Great Depression-era law that has never been used.
Section 338 authorizes the commander-in-chief to impose tariffs of up to 50% on imports from countries that have discriminated against US businesses. No trade investigation is required and there is no time limit on how long the tariffs can stay in place under Section 338.
Trump has claimed that Canada discriminates against American exports of cars, alcohol and cheese. Canada and China were the only countries that issued retaliatory tariffs against the US in response to Trump’s levies last year.
“If a country retaliates against us, we’re obviously not going to tolerate that,” Greer, the US trade rep, said last week. “We’ll take action. My sense is the Canadians, they want to have a more conciliatory approach, but we’ll see.”
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