U.S.-Canada Trade War: What to Know About Tariffs and the Negotiations

Talks between the United States and Canada failed late Friday to head off steep new tariffs on Canadian goods, prompting Canada to promise “dollar for dollar” retaliation.

Prime Minister Mark Carney of Canada said he had suspended the talks because the American side had introduced last-minute terms that were “unfair, uneconomic and called into question the reliability of any deal.” Then on Saturday, in a powerful speech to Canadians, Mr. Carney said Canada was under attack by President Trump’s tariffs and was “at war” with the United States.

Didn’t President Trump say there was a deal?

He did, twice. On Tuesday, he said the two countries had reached a deal aside from some details and had extended an earlier deadline that would have introduced the new tariffs.

On Friday, only hours before the two sides announced the collapse of the negotiations, Mr. Trump said he thought a deal could be reached.

Why did negotiations fall apart?

Mr. Carney blamed last-minute demands for the collapse of negotiations. He said, among other things, that American negotiators pushed to roll back Canada’s efforts to promote Canadian, including French-language, content in online streaming services; subsidies for industries like publishing and film production; and even mandatory labeling in French as well as English on packaging. French is an official language in Canada.

Speaking to reporters on Friday, a U.S. official said Canada wanted concessions that the United States wasn’t prepared to give, particularly when it came to the automotive sector, as well as trade in steel, aluminum and lumber.

Carney’s fighting words.

Slamming the U.S. proposal as “a bad deal,” Mr. Carney’s forceful speech on Saturday made it clear that he considered Mr. Trump’s tariffs an attack on Canada. “We’ve recognized from the start that America has changed,” he said. “We recognize that sometimes, its signature is written in pencil.”

“We cannot accept what they offered and we will not give what they asked,” he added. “We were not prepared to compromise Canada’s sovereignty or undermine our key industries.”

What is the U.S. saying?

The United States had offered to reduce its tariffs on steel, aluminum and autos, and to eliminate a recently imposed tariff on Canadian lumber, before the negotiations suddenly collapsed, the U.S. trade representative, Jamieson Greer, told The New York Times in an interview on Saturday.

Early Sunday morning, Mr. Trump wrote on his social media platform, Truth Social, that Canada wanted the “benefits of being a State, without being one!!! They have also charged our great farmers, for many years, m***ive amounts of Tariffs. No more!!!”

But he did not seem to respond directly to Mr. Carney’s muscular speech against the United States.

What will the U.S. impose tariffs on?

The new tariffs account for $20 billion of the $382 billion worth of products Americans bought from Canada last year and cover a wide array of goods, from fake mustaches to dog leashes.

The full list of more than 500 products can be found here, here and here.

The lists single out several industries, particularly forestry, a sector long targeted by the United States. Building products, especially plywood, are affected, as well as other products like tissue used to make toilet paper. Dairy products, clothing and alcohol are also on the lists.

Many of the tariffs are on products like honey that often come from small businesses, likely without the financial means to withstand a substantial loss of business for any sustained period.

The collapse of the talks also means that Canada did not roll back the tariffs of up to 50 percent that Mr. Trump put on the auto, aluminum and steel industries last year. The president also added 10 percent tariffs on softwood lumber tariffs of 35 percent.

The tariffs came into effect on Saturday. Canada’s retaliatory tariffs come into effect on Sept. 8, Mr. Carney said.

What goods face Canada’s retaliatory tariffs?

The government has yet to unveil its list. But Mr. Carney said it would largely target “steel, dairy, appliances, agricultural equipment, pulp and paper, electronics.”

Doug Ford, the premier of Ontario, Canada’s most populous province, is urging Mr. Carney to place export taxes on oil, gas and electricity, as well as critical minerals. Energy is, by far, the largest Canadian export to the United States.

Weren’t things already tense?

Yes. Since Mr. Trump began his second term, relations between the United States and Canada have been strained.

Not only has Mr. Trump targeted Canada with tariffs, he has insulted its leaders, suggested the border is an arbitrary line, and repeatedly proposed the nation be annexed as the 51st state. He said he was willing to inflict “economic pain” on Canada to get what he wanted, and recently said the country only “lives because of the United States.”

In a speech in Davos, Switzerland, in January, Mr. Carney said that the United States was no longer a guarantor of stability, and that middle powers like Canada must unite to survive. The speech, and its enthusiastic global reception, angered Mr. Trump.

Also, on July 1, Canada’s national holiday, the Trump administration declined to renew the United States-Mexico-Canada Agreement on trade for another 16 years. That means the agreement will now undergo annual reviews.

Asked how the new U.S. tariffs will affect the agreement’s continued renewal, Mr. Carney said, in French, that “it certainly isn’t good news.”