![US President Donald Trump (right) and Canadian Prime Minister Mark Carney. [AFP]](https://wimg.heraldcorp.com/news/cms/2026/08/23/news-p.v1.20260126.6d832042896f4ca6941c64f1b0b1095f_P1.jpg)
Trade talks between the United States and Canada collapsed at the final hour Saturday, pushing the two countries into an open tariff war. After the US imposed 50% tariffs on $20 billion worth of Canadian goods, Canada announced sweeping retaliatory measures. With Washington signaling further action, the conflict between the two longtime allies shows signs of dragging on indefinitely.
Canadian Prime Minister Mark Carney announced in a national address Saturday that Canada would impose retaliatory tariffs on American steel, dairy products, home appliances, agricultural machinery and pulp, according to The New York Times and other outlets. Specific tariff rates by product will be released later, with the new levies set to take effect Sept. 8.
The announcement came in response to the US imposing 50% tariffs on roughly $20 billion worth of Canadian goods starting at midnight the same day. The American tariffs cover some dairy items, alcoholic beverages such as beer and wine, hockey equipment, machinery, textiles, cement and furniture.
The two countries had been negotiating until the last moment and were reported to have come close to a deal. But they failed to bridge their differences during final talks Friday night, and negotiations ultimately broke down.
Carney rejected the US final offer as a "bad deal." He said Canada was "under attack" and described the two countries as effectively being "at war." He also criticized Washington for demanding too much while offering too little at the negotiating table.
Among the sticking points for Canada were US demands related to the French language and the cultural industries. Carney said the American side had taken issue with Canada's policy requiring French-language content on online streaming services, its cultural industry subsidies and the mandatory use of French on product packaging.
Speaking in French, Carney said Canada had come close to a comprehensive agreement but that additional demands were introduced that could affect the French language, French-Canadian culture and Canadian culture more broadly. He drew a clear line against accepting any conditions that could undermine Canadian sovereignty or key industries.
Washington left the door open to further action. US Trade Representative Jamieson Greer told Fox News that the administration was "pursuing measures to respond to Canada's retaliation." He also ruled out holding new negotiations with Canada for now.
Greer blamed Canada for the breakdown, saying the US had offered to lower tariffs on Canadian steel, automobiles and lumber but that Canada had refused. He also argued that Canada already enjoys relatively favorable terms compared with other countries that export to the US.
After talks collapsed Friday night, the US moved at midnight Saturday to impose 50% tariffs on roughly $20 billion worth of Canadian goods, covering some dairy products, beer and wine, hockey equipment, machinery, textiles, cement and furniture.
As both sides step back from the negotiating table and escalate retaliatory measures, uncertainty over the North American trade order is growing. The US and Canada share a border stretching about 8,892 kilometers and are deeply integrated trading partners with tightly linked supply chains, but the two countries have clashed repeatedly over tariffs and trade policy since Donald Trump took office.
Canada plans to use the dispute as an impetus to diversify away from its heavy reliance on the US market. Carney said he would pursue an economic diversification strategy to expand trade with countries other than the United States. Within Canada, some are calling for energy exports — including oil, gas and electricity that the US depends on — to be used as a bargaining chip if the conflict escalates further.
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