Daijiworld Media Network - Washington

Washington, Aug 22: The United States and Canada failed to reach a trade agreement late on Friday, with Washington announcing that it would impose 50 per cent tariffs on some Canadian imports, escalating tensions between the two long-standing allies.

A senior Trump administration official said tariffs imposed under Section 338 of the US Tariff Act on about $20 billion worth of Canadian goods would take effect shortly after midnight on Saturday.

Canadian Prime Minister Mark Carney said he had suspended trade negotiations with Washington and ordered Canada’s negotiators to return to Ottawa. He also said Canada would retaliate dollar-for-dollar against the new US tariffs.

“I have decided to suspend trade negotiations with the US and have directed Canada's negotiators to return to Ottawa,” Carney said in a statement.

He said Canadian negotiators had worked “in good faith” to protect the interests of Canadians throughout the talks but accused Washington of making last-minute changes to its proposed terms.

“However, last-minute changes in the US proposed terms were unfair, uneconomic, and called into question the reliability of any deal,” Carney said.

The latest escalation followed three days of negotiations in Washington between Canadian Trade Minister Dominic LeBlanc and US Trade Representative Jamieson Greer.

The new tariffs affect a relatively small share of Canadian exports but come on top of existing US duties on Canadian steel, lumber and automobiles.

The measures could put further pressure on Canada’s fragile economic recovery and influence how the two neighbours approach broader negotiations on their future free-trade relationship in the coming months.

The tariffs will apply even to Canadian goods that qualify for preferential treatment under the United States-Mexico-Canada Agreement (USMCA), which has protected a large portion of Canadian industry from earlier US tariffs.

The breakdown in negotiations marks a fresh deterioration in trade relations between the two countries, which have traditionally maintained close economic ties and one of the world's largest bilateral trading relationships.

The new measures also raise the prospect of further retaliatory action from Ottawa, potentially increasing costs for businesses and consumers on both sides of the border.

Canada's decision to match the US tariffs dollar-for-dollar signals that the dispute could widen if the two governments fail to return to negotiations.