Canada walks away from US trade talks, vows retaliatory tariffs

Canada just broke off trade talks with the US and promised to match new tariffs dollar for dollar.

Canadian Prime Minister Mark Carney suspended negotiations minutes before a Friday night deadline, calling sudden changes to US terms "unfair" and "uneconomic." The breakdown triggered fresh 50% US tariffs on Canadian goods including dairy, cement, clothing, and hockey equipment. Carney instructed negotiators to return to Ottawa and directed reciprocal tariffs on American imports.

Why it matters: Canada sends roughly 70% of its exports south, making this trade dispute an immediate threat to both economies. Financial analysts project the new 50% US tariffs alone could cut Canada's GDP by 0.3% to 0.6%.

Know this: Negotiators were close to cutting US tariffs on Canadian steel, aluminum, and autos earlier in the week. But talks fell apart over American demands for greater dairy access and the removal of provincial bans on US alcohol, which slashed American spirit exports to Canada by over 70% last year.

For now, North America's closest trading relationship is officially in uncharted territory.