Politics 3 min read By Alice Ashford
US-Canada trade talks collapse over truck tariff relief demand
Trade negotiations between the US and Canada broke down after Canada insisted on tariff relief for medium- and heavy-duty vehicles, prompting new US tariffs and Canadian counter-tariffs.
Trade talks between the United States and Canada collapsed on Friday after a last-minute standoff over whether to extend tariff relief to Canadian-built medium- and heavy-duty trucks, according to people familiar with the negotiations. The two countries had been close to a deal that would have lowered US sectoral tariffs on autos, steel, aluminium and lumber, but the Canadian demand for truck-specific relief proved insurmountable.
Under the emerging agreement, the regular US auto tariff would have been cut to 15% from the current 25%. Canada pushed for that reduction to cover larger vehicles, including pickup trucks and commercial vehicles, but Washington balked at the request, describing it as an additional demand outside the scope of the deal. The breakdown led the US to impose new 50% tariffs on roughly $20 billion worth of Canadian goods, prompting Prime Minister Mark Carney to announce dollar-for-dollar counter-tariffs on American products starting September 8.
Speaking on Saturday, Carney said denying tariff relief on trucks was “a big change, obviously,” noting that Ford’s new plant in Ontario, which produces F-350 and larger pickup trucks, would have been excluded from the benefits. “No rationale,” he added. The dispute has raised fresh questions about the future of cross-border auto manufacturing and the broader North American trade relationship.
Canadian industry officials accused the US of trying to divide the sector. Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, told the Canadian Broadcasting Corp. that Washington “at the last minute” pulled super-duty pickup trucks out of the product classes eligible for reduced tariffs. He suggested the move may have been aimed at “getting rid of auto manufacturing in Canada.” Both sides have blamed each other for the sudden collapse of the talks.
Lana Payne, national president of Unifor, Canada’s largest private-sector union, said the country had no choice but to draw a line. She expressed concern that agreeing to a tariff carveout on US parts alone would invite more aggressive demands during future negotiations over the wider North American trade pact. “Eventually you’re getting away from being able to have a competitive sector in Canada,” she said. “And that was really problematic.”
Unifor had urged the Carney government to exempt auto parts compliant with the existing North American trade deal from tariffs. Carney’s office declined to comment, while the White House and the Office of the US Trade Representative did not immediately respond to requests for comment. The collapse marks a significant setback for efforts to ease trade tensions between the two neighbours, with the new tariffs set to take effect in the coming weeks.
