US and Canada trade war escalates after talks collapse

The United States and Canada are locked in a deepening trade war after last-ditch negotiations collapsed, prompting Washington to impose 50% tariffs on a range of Canadian goods. The duties, affecting around $20 billion worth of exports, came into force after Canadian Prime Minister Mark Carney suspended talks, saying the US had asked too much and offered too little.

Carney, speaking after the breakdown, said Canada would match the tariffs dollar for dollar, with new measures targeting US steel, dairy, electronics and other sectors. He accused the US of proposing last-minute terms that were "uneconomic, unfair" and that undermined the reliability of any deal. The US Trade Representative, in turn, accused Canada of walking back on previous commitments and making new demands.

The collapse marks a dramatic reversal from earlier in the week, when President Trump had sounded confident of a deal. "I've dealt with the Prime Minister, I've got a good relationship," he said. But negotiations soured over issues including dairy, autos and digital trade, with both sides blaming each other for the impasse.

The tariffs hit a wide range of products, including wine, cement, clothing and hockey equipment. Canada's response, due to take effect in September, will include reciprocal duties on US goods. The economic stakes are high: Canada is America's second-largest trading partner, with about $700 billion in annual two-way trade. Analysts warn that around 90,000 Canadian jobs could be at risk, and the uncertainty has already chilled business investment.

Political reactions have been fierce. Ontario's premier called Trump "a bully" and "the king of bankruptcies," while Trump responded on Truth Social, accusing Canada of wanting "the benefits of being a state without being one." Despite the rhetoric, experts note that the tariffs affect only a small fraction of the overall trade relationship, but the damage to trust may be longer-lasting. Canada's opposition parties have rallied behind Carney, and public opinion polls show strong support for a firm stance against Washington.

The breakdown has also raised broader questions about the future of North American trade. With midterm elections looming in the US, some analysts suggest Trump may face domestic pressure to resolve the dispute. But for now, both sides appear dug in, and the risk of a prolonged trade war remains high.