'Bad deal': Canada's Carney announces retaliation after US tariffs

President Donald Trump's promised 50% tariffs on some Canadian goods went into effect just after midnight on Saturday, Aug. 22, after the United States and its northern neighbor failed to reach an agreement on trade.

The tariffs were announced in a July 20 executive order and were initially scheduled to go into effect on Aug. 19, but Trump put a three-day pause on the tariffs, saying the two countries were making a deal.

Both sides of the negotiating table blamed the other for crumbling trade negotiations late on Aug. 21.

Canadian Prime Minister Mark Carney said in a statement posted to social media late on Aug. 21 that he was suspending trade negotiations with the United States and ordering Canadian 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," Carney said. "However, last-minute changes in the U.S. proposed terms were unfair, uneconomic, and called into question the reliability of any deal."

Carney said Canada would match the tariffs "dollar for dollar," with retaliatory tariffs coming next month. Details of those actions would be released in the coming days, Carney said in a speech on Aug. 22.

Meanwhile, the office of U.S. Trade Representative Jamieson Greer said in a statement that Canada declined to finalize the deal.

"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's office said. "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 tariffs apply to just over 5% of Canadian exports to the United States, including on various goods such as wine, dairy, hockey sticks and cement. Carney said about $28 billion worth of goods would be tariffed. They do not apply to exempted goods including energy, potash, fish and critical minerals. The tariffs do not qualify for preferential treatment under the U.S.-Mexico-Canada free-trade agreement, which shielded much of Canadian goods from earlier U.S. tariffs.

In announcing the tariffs last month, Trump said he aimed to counteract the "burden and disadvantage on U.S. commerce from Canada’s discriminatory treatment of U.S. commerce." He had also previously threatened tariffs on Canada over wildfire smoke pouring south into the United States.

Trump administration officials previously told reporters on the condition of anonymity that Canadian trade practices on alcohol, automobiles and dairy products exported from the United States prompted the action.

Most Canadian provinces have halted the purchase of alcohol from the United States in the past year. Canada has also imposed tariffs on automobiles from the United States, but not other countries, along with more restrictive tariff-rate quotas on cheese from the United States, the officials said.

The deal that was being worked on between U.S. and Canadian trade representatives was to include "comprehensive market access for all American goods, economic security commitments, digital trade alignment," Greer's office previously said.

In an interview on Fox News, Greer said the United States doesn't have additional talks with Canada planned.

Carney announces retaliatory tariffs to come Sept. 8

In a speech from the Parliament building in Ottawa on Aug. 22, Carney said Canada's retaliatory tariffs would go into effect Sept. 8. They will affect imports from the United States across sectors including steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics, Carney said.

The prime minister said that during negotiations, Canada was willing to drop certain tariffs on steel, aluminum and automobiles. He said he would also have encouraged provinces to return U.S. alcohol to store shelves. But he said Canada would not accept last-minute changes from the United States in the agreement, including terms that would have limited Canada's ability to have trade deals with other nations. He called it a "bad deal."

"We cannot accept what they have offered, and we will not give what they have asked," Carney said.

He said he was taking the step of retaliatory tariffs "reluctantly," because they may increase costs for Canadians, but that he is "confident that it is in the best interest of Canada."

"We can't control the storm that blows in from Washington. We can, however, chart a new course by building Canada strong at home and diversifying our trading relationships abroad," Carney said.

Contributing: Joey Garrison, USA TODAY; Reuters