US, Canada trade talks collapse as 50% tariffs take effect

Trade talks between the US and Canada collapsed late Aug. 21, triggering 50% tariffs on a range of Canadian imports, the US Trade Representative said on the social media platform X on Aug. 22.

Negotiators failed to reach an agreement after US President Donald Trump announced in July that the US would impose 50% tariffs on certain Canadian exports in response to Canadian trade policies.

The new 50% tariffs will apply to alcohol, dairy, furniture, some clothing, among other US imports from its northern neighbor. The new tariffs do not apply to steel and aluminum imports, which already face separate 50% sectoral tariffs under Section 232 of the Trade Expansion Act of 1962.

"Tonight, Canada declined to finalize the trade deal under the terms agreed earlier this week," USTR said. "This is a missed opportunity for Canada to partner with the United States, which is the fastest growing economy in the G7."

The agency was referring to the Group of Seven countries, which consist of Canada, France, Germany, Italy, Japan, the United Kingdom, the US, and the European Union.

Canadian Prime Minister Mark Carney confirmed he suspended negotiations with the US.

"In recent weeks, we made important progress toward improving Canada's position as having the best deal in the world with the U.S. However, that progress has not been enough to meet our objectives for Canadians," Carney said in an Aug. 21 statement.

The US offered tariff reductions on steel, aluminum, autos and lumber as part of the negotiations, according to the Trade Representative's statement. The proposal would have included a national security partnership to cooperate on export controls, critical minerals cooperation and the announcement of formal negotiations to review the US-Mexico-Canada Agreement, which the US declined to renew in July.

The tariffs were initially set to take effect Aug. 19, but Trump delayed them for three days to allow additional time for negotiators to finalize a deal. Rumors of a deal swirled around the intense negotiations, including the reports that the US demanded a right of first refusal on Canadian metals and a US offer to cut the tariff on Canadian aluminum and steel.

But talks collapsed and the new tariff went into effect on Aug. 22.

Carney said Canada would introduce additional government measures to support Canadian workers and businesses.

"Canada will match those tariffs dollar for dollar to protect our workers and businesses," Carney said in his statement.

US demands went too far and threatened Canadian sovereignty, Carney told reporters Aug. 22.

"Our response will be concentrated in sectors such as steel, dairy appliances, agricultural equipment, pulp and paper electronics," Carney said. The targets will "also include products that are currently subject to unjustified section 232 and 338 tariffs."

Canada is heavily dependent on the US market, with most Canadian exports heading south of the border. In 2025 Canada exported C$555.4 billion in goods to the US, accounting for 71.6% of Canada's total exports, according to Statistics Canada.

The US exported $9.9 billion in iron and steel products to Canada in 2025, according to S&P Global Energy Global Trade Analytics Suite Intelligence data. The US imported $8.9 billion in iron and steel products from Canada in 2025.

Speaking Aug. 22, Carney cast the US as making a "power play" and, painting a different picture than the USTR, Carney said the US made last minute demands that were unacceptable to Canada. These demands in the last hours of talks included an effort to restrict Canada's ability to have other trade deals and threats to Canadian language rules, Carney said.

The USTR did not immediately respond to an emailed request for comment.

"You're at war when you get attacked. We got attacked," Carney said in response to a question about getting into a trade war with the US.

Carney, in context of the US levying hefty tariffs against Canada, said the US was missing an opportunity to partner in areas like critical minerals.

"We've got a lot of demand for critical minerals, so there's less opportunity to cooperate with the United States," he said.

The White House did not immediately respond to a request for comment.

In 2024, Canada accounted for 17.7% of US metals and minerals imports, valued at $43.5 billion, according to the US International Trade Commission. The country is a key supplier of aluminum and steel to the US, though exports of both metals have plummeted after the 50% tariffs took effect in 2025.