Canada drops US trade deal: You’re at war when attacked, says Carney

Canada’s Prime Minister Mark Carney said on Saturday he was not prepared to compromise Canada’s sovereignty, saying the US “asked too much and offered too little”. He spoke after trade talks with Washington broke down late Friday, triggering a fresh round of US tariffs on Canadian goods. Carney called the tariffs a “miscalculation” and vowed dollar-for-dollar retaliatory tariffs on US goods from 8 September. 

Carney said he walked away from a deal because he was not prepared to “compromise Canada’s sovereignty”. He added that Canada will match US tariffs “dollar-for-dollar” from 8 September, including levies on steel, dairy, appliances and electronics. Donald Trump has yet to comment. Carney said Canada was retaliating “reluctantly” to protect its interests, adding that details of the counter-measures would be released in the coming days.

Both bouquets and brickbats were showered on the Canadian PM, with some experts describing the move as catastrophic for Canada and others hailing him for calling the US bluff. Carney, however, appeared to enjoy broad support from provincial leaders. Doug Ford, premier of Canada’s most populous province, Ontario, said, “The prime minister has my full support for a strong response — tariff for tariff, dollar for dollar.” British Columbia Premier David Eby said Friday night that “our politeness should never be mistaken for weakness”.

“Every negotiation with the Trump administration is a high-stakes game of chicken because Trump keeps moving his own goalposts. Mark Carney did what few leaders have dared: He walked away from a trade deal he judged bad for Canada and vowed to match U.S. tariffs "dollar for dollar." Trump's offer to Canada was no real trade deal at all, but a protectionist arrangement with permanent tariffs baked in, much like the one he has dangled before India,” said strategic affairs analyst Dr Brahma Chellaney.

One reason cited for Carney’s 8 September deadline for reciprocal tariffs was to give President Trump an opportunity to intervene and save the deal. US trade negotiators, it was explained, pushed too hard and came

up with fresh demands which snapped Carney’s patience. Carney said as much and pointed out that Canada had patiently negotiated with the US for the past year. However, he suggested, no deal is better than a bad deal. Another reason cited for the negotiation’s failure is said to be the last-minute insertion of language by US that would have restricted Canada’s ability to have trade deals with others, notably China.

The "last-minute changes in the US terms were unfair, uneconomic, and called into question the reliability of any deal”, said Carney. Trade negotiators had been engaged in intense talks since July, after President Donald Trump threatened to impose a 50 per cent levy on nearly $20bn (C$28bn; £14bn) of Canadian imports by 19 August. Trump had temporarily suspended the tariffs earlier this week, saying the two sides were close to signing a trade deal that was "very good" for both countries.

But minutes before the deadline for a deal, Carney said that while "important progress" had been made in the talks it was "not enough to meet our objectives for Canadians". After Carney's announcement US trade representative Jamieson Greer said in a statement: "Tonight, Canada declined to finalise the trade deal under the terms agreed earlier this week. Despite the US 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."

Negotiators were reportedly discussing a deal that would reduce US tariffs on Canadian steel and aluminium from 50 to 25 per cent, and on Canadian autos from 25 to 15 per cent. In exchange, Carney had asked Canadian provinces to restore US alcohol to store shelves. While Canada sends approximately 70 p.c. of its exports to the US, tension between the two trading partners have been simmering since Trump returned to office in January last year and unleashed a wide-ranging global programme of tariffs, upending decades of free trade between Canada and the US.

Now that talks have broken down, Canada will be hit with new 50 per cent US tariffs imposed by Trump using a Depression-era law called the Tariff Act of 1930. They will be applied on a range of goods including wine, dairy, cement and clothing. The new levies are in addition to existing tariffs the US had already imposed on Canadian steel and aluminium, autos and lumber.