Canada and the United States are entering a new phase in their trade relationship after negotiations aimed at avoiding fresh tariffs broke down, with Canadian Prime Minister Mark Carney announcing “dollar for dollar” retaliation against Washington, the BBC reported.

Carney described the new US tariffs as a “miscalculation”, arguing they were designed to “hurt and divide” Canada. He made clear that he had walked away from the deal because he was not prepared to compromise on issues concerning his country’s sovereignty.

“They asked for too much and offered too little,” he said, in his first public comments since the talks collapsed.

According to Carney, Canada feels it is “under attack” from its closest trading partner and will not accept terms that limit its economic and commercial independence.

Retaliation from 8 September

Ottawa announced that from 8 September it will impose new tariffs on American products, matching the value of the US measures.

Canada’s countermeasures are expected to target American steel, dairy products, household appliances, electronics, agricultural equipment, and pulp and paper products, among other goods.

The Canadian government is expected to set out full details of the measures in the coming days. Carney stressed that the country was proceeding with retaliation “reluctantly”, in order to protect workers and businesses.

The US has already introduced tariffs of 50% on billions of dollars’ worth of Canadian goods, adding further strain to a trade relationship that has been under intense pressure for more than a year.

The new charges come on top of existing US tariffs on Canadian steel, aluminium, cars and timber.

This is why the US-Canada trade negotiations collapsed.

The US wanted to have control over the trade deals Canada was making around the world.

Furthermore, they wanted to use Canada (Canada's resources) as a leverage for their own deal and diplomatic activities around the… pic.twitter.com/Qw0Bj4Igdp

— Kirk Lubimov (@KirkLubimov) August 22, 2026

How the talks collapsed

Just days earlier, Canada and the US had appeared optimistic that a deal could be reached.

Talks broke down on Friday night, with both sides blaming each other for last-minute changes.

Carney said the US side had presented “unfair” and “economically irrational” demands shortly before the negotiations were due to conclude. Among the terms he described as unacceptable were restrictions on Canada’s ability to strike new trade agreements with other countries.

He also rejected the US claim that Ottawa had introduced new demands at the last minute.

“We clarified exactly what was on the table and kept being disappointed by the responses,” he said.

The US, for its part, accused Canada of backtracking on terms that had already been agreed. US Trade Representative Jamieson Greer said there were currently no plans to resume talks.

According to Greer, Washington had been willing to lower some of the tariffs it had imposed on Canada as part of the deal that ultimately fell through.

USMCA also in doubt

The collapse of the talks has raised concerns over the future of the USMCA, the trade agreement between the US, Canada and Mexico that replaced the 1994 North American Free Trade Agreement (NAFTA).

Signed during Donald Trump’s first presidential term, the USMCA underpins roughly $1.6 trillion in annual trade between the three countries.

Canada and Mexico had formally requested a 16 year extension of the agreement, but the US did not agree to renew it in its current form.

Asked about the implications of the new impasse for the USMCA, Carney said only that it was “certainly a bad development”.

Tariffs at the centre of Trump’s agenda

Tariffs remain a central pillar of Trump’s economic policy. He argues that charges on imported goods can strengthen American industry, bring production back to the US and create new jobs.

Critics counter that the cost is passed on to consumers, driving up prices and causing serious disruption to international supply chains.

The new dispute with Canada carries particular weight given the deep interdependence and long-standing trade ties between the two economies.

For Carney, though, the message is clear: Ottawa does not intend to back down under pressure from the new US tariffs. “We will not let any country determine our future,” he said after the talks collapsed.