US to Impose 50% Tariff on $20 Billion of Canadian Goods as Ottawa Vows Retaliation

Trade talks between the US and Canada have broken down, with Washington set to impose a 50% tariff on about $20 billion of Canadian imports. Canada has vowed to respond, raising the risk of a renewed tariff war between the two countries.

AP and AFP reported on Aug. 21 that US Trade Representative Jamieson Greer wrote on X that Canada had refused to finalize a trade agreement under terms settled earlier in the week.

The two sides had extended by three days a tariff deadline originally set for Aug. 19 and continued last-minute negotiations, but failed to reach a final deal. As a result, the Trump administration will impose a 50% tariff from midnight on Aug. 22 on about $20 billion of Canadian imports. The products include some dairy items, beer, wine and other alcoholic beverages, hockey equipment, machinery, textiles, cement and furniture.

The Office of the US Trade Representative estimates those goods account for about 5% of annual imports from Canada. It cited Section 338 of the Tariff Act of 1930 as the legal basis for the move. The provision allows the US president to impose tariffs of up to 50% on countries that discriminate against US commerce.

The US had offered Canada treatment among the most favorable granted to any major exporter to the American market, Greer wrote. But Canada introduced new demands and reversed earlier commitments, upsetting what he described as a carefully crafted balance reached over recent days.

Greer also said Canada had missed an opportunity to work with the US, which he called the fastest-growing economy in the Group of Seven. He blamed Ottawa for the collapse of the talks, arguing that Canada rejected a US proposal that would have sharply lowered tariffs on products it had objected to, including steel and aluminum.

Before the latest tariffs, the Trump administration had already targeted major Canadian industries, using Section 232 of the Trade Expansion Act to impose 50% tariffs on Canadian steel and aluminum and 25% tariffs on automobiles. Trump said in July that Canada was discriminating in the auto, alcohol and dairy sectors and signaled an additional 50% tariff on some Canadian imports. Negotiators from both countries then held intensive private talks for several weeks, but failed to bridge their differences.

Canadian Prime Minister Mark Carney said in a statement after the talks collapsed, "This evening I decided to suspend trade negotiations with the United States and instructed Canada's negotiating team to return to Ottawa." He added that Canada would make the US "pay an equivalent price" for the tariffs to protect Canadian workers and businesses. Carney also called the US's last-minute proposal unfair and uneconomic, saying it made any agreement hard to trust.

Carney's pledge to retaliate on a dollar-for-dollar basis has heightened the risk of a renewed trade war. The Washington Post said the tariffs themselves may have only a limited direct impact on US consumers, but warned that continued retaliation could destabilize the broader North American trade order.

Kang Kyung-ju, Hankyung.com reporter qurasoha@hankyung.com