By A trade agreement between the U.S. and Canada fell apart just before midnight on Friday, marking a significant setback in the ongoing trade war between the two traditionally close allies.
The deal’s collapse means 50 percent tariffs on $20 billion worth of Canadian goods now go into effect, hitting products ranging from alcohol to hockey skates.
“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 walkbacks of other commitments by Canada upended the careful balance reached in the past days,” U.S. Trade Representative Jamieson Greer told reporters late Friday night.
“This is a missed opportunity for Canada to partner with the U.S.,” Greer added.
Canadian Prime Minister Mark Carney said in a statement that the results of the negotiations had “not been enough to meet our objectives for Canadians” and pointed the finger at Washington.
“Last-minute changes in the U.S. proposed terms were unfair, uneconomic, and called into question the reliability of any deal,” Carney said. “As a result, this evening, I have decided to suspend trade negotiations with the U.S. and have directed Canada’s negotiators to return to Ottawa.”
He added that Canada will match the new U.S. tariffs “dollar for dollar.”
The failure came following a marathon series of talks led by Greer and Canada-U.S. Trade Minister Dominic LeBlanc over the past week. President Donald Trump also spoke with Carney multiple times in recent days.
There appeared to be a breakthrough earlier this week, when Trump announced he was pausing, for three days, the 50 percent tariff that was set to kick in on Aug. 19. “Canada and the U.S.A., subject to the finalization of documents, have a DEAL!” Trump wrote on social media late Tuesday night.
As part of the proposed agreement, the U.S. had offered to lower tariffs on automobiles, steel and aluminum if Canada was willing to drop its retaliatory measures and allow more access for U.S. businesses in its dairy and lumber markets.
Greer said Friday that as part of the deal, the administration was also prepared to open formal negotiations with Ottawa on updates to the U.S.-Mexico-Canada Agreement, the North American free trade deal that is currently up for a six-year review. The administration launched formal talks with Mexico on the pact earlier this summer but has thus far sidelined Carney’s government.
Greer did not specify which specific disagreements killed the deal Trump had touted just days earlier.
Its collapse sets up an even more fraught period for the massive North American trade relationship ahead of U.S. midterm elections, with voters consistently saying they are concerned about affordability.
Businesses on both sides of the border, already concerned by the Trump administration’s decision not to automatically extend the USMCA when it came up for review in July, now enter a period of protracted uncertainty and potentially punishing tit-for-tat tariffs, threatening the continent’s integrated supply chains and the industries that rely on them.
“This will be a body blow to North American competitiveness in this self-defeating trade saga. A whopping, non-absorbable tariff is not sustainable or viable for business,” said Candace Laing, president and CEO of the Canadian Chamber of Commerce and member of the Prime Minister’s Advisory Committee on Canada-U.S. Economic Relations in a statement. “Americans will see their costs go up, and Canadians will see customers, investment and small businesses disappear.”
The auto industry, in particular, could suffer.
“We are disappointed that the two nations were not able to reach an agreement. The negative impact is already being felt with U.S. auto exports to Canada down 23% over the past year,” Jennifer Safavian, president and CEO of Autos Drive America, said in a statement. The advocacy group represents international automakers that have operations in the United States, including Honda, Toyota and Volvo. “The U.S. auto industry’s continued success relies upon strong and stable partnerships across North America. We urge all parties to continue negotiations to finalize an interim deal and create a path toward a strengthened USMCA.”
Oliver Ward, Mickey Djuric and Nick Taylor-Vaisey contributed to this report.
Originally published on www.politico.com — View original