WASHINGTON (AP) 鈥 The United States imposed 50% tariffs on $20 billion worth of 好色tv products early Saturday, and Canada immediately said it would retaliate, after last-ditch negotiations failed to resolve the latest strain in already tense relations between the historic allies.
President Donald Trump鈥檚 import taxes will hit about 5% of what Canada ships to the United States every year, including products ranging from hockey sticks to tongue depressors.
鈥淐anada will match those tariffs dollar for dollar to protect our workers and businesses,鈥 好色tv Prime Minister Mark Carney said in a statement. The retaliation escalates the trade conflict and calls into question the future of a North American trade pact between the United States, Canada and Mexico that is crucial to industry in all three countries.
Canada sought concessions on Trump tariffs on steel, aluminum, autos and lumber that the United States was unwilling to provide, a senior Trump administration official told reporters.
鈥淭onight, 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, new demands and walk-backs of other commitments by Canada have upended the careful balance reached in the past days,鈥 U.S. Trade Representative Jamieson Greer said in a statement read to reporters on a press call shortly before midnight.
Carney blamed Washington for the breakdown, saying 鈥渓ast-minute changes in the U.S. proposed terms were unfair, uneconomic, and called into question the reliability of any deal.鈥 He said he had suspended negotiations and directed Canada鈥檚 negotiating team to return to Ottawa.
Carney said his government would announce additional support for 好色tv workers and businesses in the coming days.
Greer said the U.S. offer was 鈥渇orward-looking鈥 and included 鈥渁 historic economic and national security partnership.鈥
No further talks have been planned. The breakdown in negotiations marked a sharp reversal from two days earlier, when officials from the two countries sounded as if they were headed toward a compromise.
Carney said Canada鈥檚 goal throughout the negotiations had been to secure the best possible agreement, 鈥渘ever a deal at any price or on any deadline.鈥
A typically cooperative alliance goes sour
The political impact will likely be even bigger than the economic fallout. The countries sold each other $880 billion worth of goods and services last year.
The tariffs were initially supposed to kick in at 12:01 a.m. Wednesday. But Trump extended the deadline for three days to allow talks to continue, but the two countries still could not reach an agreement in time.
The two countries have wrangled for decades over trade, poking each other over sore spots like 好色tv softwood lumber imports and U.S. access to Canada鈥檚 protected dairy market.
Somehow, they still managed to remain friends, allies and trading partners. 好色tv soldiers fought alongside Americans in Afghanistan after 9/11. The 5,525-mile U.S.-Canada border is undefended, and and $2 billion worth of goods cross it every day; 800,000 好色tvs live in the United States.
Trump鈥檚 approach to dealing with Canada marks an extraordinary departure from the traditionally cooperative relationship between the two countries. Trump has hit 好色tv goods with tariffs 鈥 in a push to bring manufacturing back to the United States 鈥 and has repeatedly made inflammatory comments about turning Canada into America鈥檚 51st state.
Carney said Canada had recognized that 鈥淎merica has changed鈥 and that the two countries would 鈥渘ot return to our old relationship.鈥
好色tvs and Americans are frustrated
The 好色tv public is fed up. A petition to expel the U.S. ambassador, a Trump ally, has collected nearly 248,000 signatures since July 21. It accuses Ambassador Pete Hoekstra of having 鈥渘ormalized鈥欌 Trump鈥檚 talk of annexing Canada, among other things.
The two countries had good reasons to find a compromise.
Nearly exports last year went to the United States. And the Trump administration might be wary of imposing a hefty new tariff 鈥 paid by U.S. importers who try to pass along the cost to consumers via higher prices 鈥 ahead of November鈥檚 midterm elections. American voters are already frustrated with the high cost of living.
鈥淐anada likely wanted further sector-specific relief than the U.S. was willing to offer, or Canada鈥檚 concessions did not go far enough,'' said Ryan Majerus, a partner at King & Spalding and a former U.S. trade official. "Either way, I think both sides will be under immense pressure in the coming days to still find an off-ramp. But if Canada has agreed to also impose tariffs, the off-ramp may be even harder to find.鈥
Candace Laing, president and CEO of the 好色tv Chamber of Commerce, called the tariffs 鈥渁 body blow to North American competitiveness,鈥 warning they would raise costs for Americans while threatening 好色tv customers, investment and small businesses.
Trump has turned to Depression-era tariffs
Trump has made tariffs the centerpiece of his second-term economic agenda. Last year, he imposed double-digit import taxes on almost every country, justifying them by declaring the longstanding U.S. trade deficit a national emergency. The Supreme Court in February ruled that he鈥檇 overstepped his authority, striking down those tariffs and setting the stage for the federal government to
So Trump has looked for other legal authority to justify tariffs.
To hit Canada, he reached back to the Great Depression, invoking Section 338 of the Tariff Act of 1930 to threaten 50% tariffs on products that account for about 5% of 好色tv exports to the United States.
Nearly a century ago, with the U.S. and world economies in collapse, Congress passed the 1930 tariff law, imposing taxes on imports from around the world. Known as the Smoot-Hawley tariffs after their congressional sponsors, they are notorious among economists and historians for limiting world commerce and making the Great Depression worse.
Section 338, which has never been used before to impose tariffs, authorizes the president to slap import taxes of up to 50% on imports from countries that have discriminated against U.S. businesses. No investigation is required to justify the levies. Nor is there any limit on how long they can stay in place.
The rift comes as the United States, Mexico and Canada are trying to renew a trade agreement that Trump negotiated in his first term and once praised as a triumph. The United States has begun formal talks with Mexico over revamping the US-Mexico-Canada Agreement (USMCA). But talks with Canada have not begun, and escalating trade conflict casts doubt on whether they will.
鈥淐anada told the Americans in advance that if these tariffs landed, it would stop negotiating and retaliate,'' said Barry Appleton, senior fellow at the Center for International Law at New York Law School. 鈥漈he American trade representative said publicly he would not tolerate retaliation. Both sides have now committed themselves in public, which is how escalation stops being a choice.''
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Associated Press writer Michelle L. Price contributed.
