Canada, U.S. fail to strike tariff deal, trade war escalates

A high profile trade talk between US and Canada has failed. Both countries failed to reach a trade deal and the U.S. said it would impose 50% tariffs on some imports from Canada, an escalation of tensions between the two long-time allies.Both Canada and the U.S. made the announcement in separate statements late Friday.  A senior Trump administration official said Section 338 tariffs on about $20 billion worth of Canadian goods would go into effect just after midnight on Saturday. Canada’s Prime Minister Mark Carney said he had suspended trade negotiations and Canada would retaliate dollar for dollar on the new tariffs and  and have directed Canada’s negotiators to return to Ottawa,” Carney said in a statement.'We will not allow any nation to determine our future. We will set our own course to keep Canada building strong for all," the statement added. The prime minister also adds that “last-minute changes in the U.S. proposed terms were unfair, uneconomic, and called into question the reliability of any deal.

My statement on Canada-U.S. trade negotiations: pic.twitter.com/65OuQH40ra

— Mark Carney (@MarkJCarney) August 22, 2026

U.S. Trade Representative Jamieson Greer, meanwhile, called the failed talks a “missed opportunity.” “Canada declined to finalize the trade deal under the terms agreed earlier this week, despite the U.S. offer to Canada to receive the best treatment of any major exporter to our market,” Greer said in a statement. “New demands and walk backs of other commitments by Canada have upended the careful balance reached in the past days.”
According to Greer, the U.S. offered “significant tariff reductions on steel, aluminum, autos and lumbers in exchange for other concessions from Canada.” Greer also said the U.S. offered “a historic economic and national security partnership” and the announcement of formal Canada-U.S.-Mexico Agreement (CUSMA) negotiations.