American tariffs on Canadian goods take effect after trade talks fall apart

American tariffs on Canadian goods take effect after trade talks fall apart

Prime minster says Canada will match latest American levies 'dollar for dollar'

The Trump administration's latest round of tariffs against billions of dollars worth of Canadian goods took effect just after midnight Saturday, after the two countries failed to seal a last-minute trade deal that satisfied both sides.

U.S. Trade Representative Jamieson Greer issued a statement confirming the tentative deal had fallen apart.

"Tonight, 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," Greer told reporters just after 11:30 p.m. ET.

"In addition, Canada is continuing to maintain its prolonged retaliation against the United States, including, among other things, flat out prohibitions on certain American goods and services."

The fresh slate of tariffs kicked in at 12:01 a.m. ET, according to a senior administration official.

Prime Minister Mark Carney confirmed negotiations had fallen apart. He said Canada "will match the new tariffs dollar for dollar to protect our workers and businesses."

"I have decided to suspend trade negotiations with the U.S. and have directed Canada’s negotiators to return to Ottawa. They have worked hard, in good faith, to defend the interests of Canadians throughout these negotiations up until the very last minute. However, last-minute changes in the U.S. proposed terms were unfair, uneconomic, and called into question the reliability of any deal," read a statement from the prime minister.

U.S. President Donald Trump did not immediately comment.

The final hours before Trump's tariff deadline

The fresh American tariffs and the promise of Canadian counter-tariffs are a significant escalation in the trade dispute between Canada and the U.S., two countries once seen as being as close as can be on trade. Canada's trade minister met with Greer, his American counterpart, in Washington, D.C., throughout the week to try to find an agreement before Friday's deadline.

Under the Trump administration's new policy, levies of 50 per cent will apply to hundreds of products worth more than $28 billion — from plywood and cement to wine and hockey sticks.

The Trump administration has said the tariff threat was a response to Canada's retaliation against U.S. trade policy and its discrimination against the American dairy, alcohol and automotive sectors. Last month, Carney said most of those measures — like taking American liquor off the shelves in several provinces — were "merely" Canada's response to the argument the White House started by announcing other levies last year.

The new duties are imposed through Section 338 of the U.S. Tariff Act, or the Smoot-Hawley Act, which was created during the Great Depression nearly a century ago. The law gives the president the ability to apply tariffs at a rate of up to 50 per cent on countries deemed to be discriminating against the American economy.

The Trump administration has taken issue with Ottawa on three key issues: Canadian provinces' ongoing ban on American liquor, limiting American dairy producers' access to the northern market and restricting certain U.S. vehicle exports.

Canada's electronics sector stands to take the biggest hit from the new levies. Canada exported more than $4 billion US worth of electronics equipment that would be subject to Trump’s new tariffs. In fact, certain electrical boards and controllers are on the list and are the largest value export to the U.S. of any threatened category.

The tariffs would also take a bite out of Canada’s plastics industry, including things like bottles, floor coverings and various household items. The value of items in this category is about $3 billion US.

British Columbia will be disproportionately affected by these import duties compared to other provinces. Items subject to the new taxes, most notably wood and paper, represent more than 13 per cent of the province’s total exports to the U.S., higher than any other province.

Quebec also stands to suffer losses, since roughly 10 per cent of its exports are now exposed. The new levies add to severe, pre-existing 50 per cent tariffs on steel and aluminum, one of the province's largest industries.

Rhianna Schmunk is a senior writer covering domestic and international affairs at CBC News. Her work over the past decade has taken her across North America, from the Canadian Rockies to Washington, D.C. She routinely covers the Canadian courts, with a focus on precedent-setting civil cases. You can send story tips to rhianna.schmunk@cbc.ca.