Canada to impose retaliatory tariffs on US goods from September 8; Carney vows 'dollar-for-dollar' response

CANADIAN Prime Minister Mark Carney on Saturday said Canada will impose retaliatory tariffs on US goods from September 8, after trade talks aimed at averting new punitive US tariffs collapsed on Friday. Details of the measures will be announced in the coming days, Carney said, Reuters reported.

"In the coming days, we'll release details of these new tariff measures, measures which will come into force the Tuesday after Labor Day," Carney told a news conference.

The statement came as Canada suspended trade negotiations with the United States on Friday after Carney said last-minute changes to Washington's proposed terms were "unfair" and "uneconomic".

Carney also directed Canada's negotiators to return to Ottawa, saying the government would not accept a trade agreement "at any price or on any deadline".

The decision came hours before the US was set to impose an additional 50% tariff on Canadian goods. Carney, in a statement, said Canada would respond with tariffs on US goods "dollar for dollar" to protect Canadian workers and businesses.

The tariffs are expected to affect roughly $20 billion of Canadian exports, including wine, furniture, dairy products, cement, clothing, fishing equipment and hockey equipment, CNBC reported.

Why did Canada walk away?

Canada had entered the negotiations seeking to preserve tariff-free access to the US for most Canadian businesses, reduce tariffs on strategic industries and provide greater certainty for businesses and workers.

Carney said the two sides had made progress in recent weeks but that it had fallen short of Canada's objectives.

"Last-minute changes in the US proposed terms were unfair, uneconomic, and called into question the reliability of any deal," Carney said in his statement.

He said Canada's objective throughout the negotiations had been to secure the best deal for Canadians, rather than reach an agreement simply because of a deadline.

The talks had appeared close to a breakthrough earlier in the week. US President Donald Trump had postponed the original Wednesday tariff deadline, saying a deal was close to being finalised. Canada's trade minister Dominic LeBlanc also said on Thursday that the two sides were "very close", CNBC reported.

Canada to match US tariffs

Carney said the US intended to impose the new tariffs at midnight and that Canada would match them "dollar for dollar".

The Canadian government will also introduce additional measures to support businesses and workers affected by the trade dispute, building on nearly $25 billion in support provided over the past 18 months, according to Carney's statement.

US Trade Representative Jamieson Greer offered a different account of why the talks failed. In a post on X early Saturday, Greer said Canada had declined to finalise the deal under terms agreed earlier in the week.

Greer said Washington had offered Canada significant tariff reductions on steel, aluminium, automobiles and lumber, but accused Ottawa of continuing retaliatory measures against US goods and services.

Carney's strategy: Reduce dependence on US

The collapse of the negotiations comes as Canada seeks to reduce its economic dependence on the United States.

Carney said his government had been working to strengthen the domestic economy and diversify Canada's international partnerships since taking office.

Canada's existing free trade agreements provide preferential access to 1.5 billion consumers, and the government expects to double that market access by the end of the year, he said.

The country is also advancing nearly $500 billion in major infrastructure projects, while exports to non-US markets are expected to double over the next decade, according to Carney.

He said Canada's economy was accelerating and was on course to record the second-fastest growth in the G7 over the next two years.

The prime minister has previously argued that Canada cannot return to its old economic relationship with the US. The New York Times reported that Carney has been pursuing partnerships in Asia and Europe as part of a longer-term effort to reduce Canada's dependence on its southern neighbour.

What does the breakdown mean for Canada?

Canada is particularly exposed to the trade dispute because of its close economic integration with the US.

The breakdown therefore carries major risks for Canadian businesses and workers, even as Carney seeks to diversify the country's trade relationships.

At the same time, Carney's decision has received support from several Canadian provincial leaders. Ontario Premier Doug Ford backed the move, while British Columbia Premier David Eby said Canada would continue fighting.

Alberta Premier Danielle Smith, however, urged Carney to return to the negotiating table, while Canadian industry has expressed concern over the prolonged uncertainty created by the trade conflict, the New York Times reported.

The latest breakdown also adds another complication to negotiations over the USMCA, the trade agreement covering the US, Canada and Mexico.

For Carney, the decision represents a significant gamble: accept a deal that he believes falls short of Canada's interests or absorb the economic cost of another round of US tariffs while pursuing a more independent trade strategy.

"We will not allow any nation to determine our future," Carney said.