A proposed trade agreement between the United States and Canada has collapsed at the final stage, clearing the way for the Trump administration to impose a 50% tariff on billions of dollars worth of Canadian imports.
The new duties are scheduled to take effect at 12:01 am on Saturday and will cover hundreds of products imported from Canada, including plywood, alcoholic beverages, electrical equipment and hockey-related goods.
The failure represents a significant setback for two closely connected trading partners that exchanged nearly $900 billion in goods and services last year.
Relations have already been strained by President Donald Trump’s repeated tariff threats and controversial comments about Canada’s future relationship with the US.
Washington and Ottawa had spent several weeks negotiating a possible agreement. A draft arrangement reportedly included reducing tariffs on certain Canadian steel and aluminium products to 25% and lowering duties on Canadian automobiles to 15%.
In return, Canada was expected to withdraw retaliatory tariffs introduced after Trump began imposing trade restrictions last year.
Canada, US fail to reach final agreement
The White House had also sought additional concessions from Ottawa, including the removal of Canadian counter-tariffs on American vehicles and an end to restrictions on the retail sale of US alcoholic beverages across most Canadian provinces.
However, negotiations failed to produce a final agreement. US Trade Representative Jamieson Greer said Canada had declined to complete the proposed arrangement.
A US official indicated that no fresh negotiations had been scheduled following the breakdown.
The escalation could put additional pressure on businesses and consumers on both sides of the border, while threatening to disrupt supply chains between two economies that have historically maintained deep commercial ties. The higher tariffs also raise the prospect of further retaliatory action from Canada, potentially intensifying the broader North American trade dispute.
