TWN Info Service on WTO and Trade Issues
23 August 2026
Third World Network

Trade: Canada-U.S. Trade Talks Collapse as Carney Vows 'Dollar-for-Dollar' Retaliation

Geneva, 23 August (D Ravi Kanth) – In a world seemingly drawn into trade wars unleashed by the Trump Administration since April 2025, Canada's Prime Minister Mark Carney on Saturday declared that his country is being attacked by its largest trading partner, the United States, on the bilateral trade front.

However, the U.S. Trade Representative Ambassador Jamieson Greer vehemently countered the Canadian Prime Minister's statement, saying Ottawa walked out of the talks even after Washington agreed to reduce tariffs on steel and aluminium, according to media reports.

In a sudden national broadcast on Saturday (22 August), Carney appeared to echo the constant refrain of many countries that they are being nudged into trade wars by the Trump Administration since April 2025, said analysts.

"You're at war when you are attacked, and we got attacked," the Canadian Prime Minister told his countrymen and women in a defiant broadcast on Saturday (22 August).

Carney's remarks, delivered after a year-long marathon of negotiations with its largest trading partner—conducted, apparently, in a tense and coercive atmosphere, unlike the proverbial give-and-take basis—signalled a spiralling trade war, said an analyst on a background basis.

"We cannot accept what they've offered, and we will not give what they've asked," Carney said, suggesting that several last-minute changes demanded by the U.S. had resulted in shifting the goalposts.

Without offering details of specific demands raised by the U.S. after both sides agreed to a broad outline of the deal, the Canadian Prime Minister merely pointed out that the last-minute demands of Washington are "unacceptable."

Significantly, he suggested that Canada was prepared to drop its proposed retaliatory tariffs on steel and aluminium if Washington reciprocally reduced the tariffs on Canadian companies, arguing that the two sides were on the verge of signing a bilateral trade agreement. "In exchange for a fair deal, we would encourage our provinces to return U.S. alcohol to the shelves."

The latest American tariffs on Canadian goods" are designed to hurt and divide us," Carney said emphatically, insisting that "they are a miscalculation because Canadians will always take care of each other." "We know we're stronger together," he stressed in his address to the nation, which is available on YouTube.

The last-minute demands raised by Washington were characterized as "unfair, uneconomic and called into question the reliability of any deal," according to the Canadian Prime Minister.

He went on to threaten the U.S. that Ottawa will retaliate with a "dollar-for-dollar" tariff, in response to the U.S. move to impose a 50% tariff on Canadian goods estimated at USD 20 billion.

"Last spring, I warned that America is trying to break us so that they can own us, and I promised: 'That will never happen,'" Carney reminded his audience. "We are keeping that promise," he vowed, adding that Canada is becoming stronger and less dependent on the U.S.

Recently, President Trump had suggested annexing Canada as its 51st state—an idea that has been repeatedly floated, according to a Time magazine report of 2 July.

Ironically, it seems to have become a sine qua non for the Trump Administration to repeatedly claim the forceful annexation of territories like Greenland or key waterways like the Strait of Hormuz in its unending war with Iran, said analysts.

USTR's Response

The USTR, however, indicated that Washington was prepared to reduce its tariffs on steel, aluminium, and autos, and to eliminate a recently imposed tariff on Canadian lumber, before negotiations suddenly collapsed last night.

The proposed U.S. measures on Canadian items would have given Ottawa the most preferential treatment of any trading partner, Ambassador Greer told the New York Times on 22 August.

"The United States was prepared to reduce the tariff on steel from 50 percent to 25 percent for the majority of steel Canada sent to the United States," Ambassador Greer said. Steel would be subject to what is known as a tariff-rate quota system, in which only a certain amount of steel imports would receive that lower tariff.

The USTR also indicated that Washington had pledged to eliminate the 10 percent tariff on softwood lumber that the Trump administration imposed last year using a provision known as Section 232.

The United States had also offered to reduce a 25 percent tariff on cars that Washington put in place last year. But because Canada qualifies for a further reduction when the cars contain any amount of U.S. content, the automotive tariffs could have gone as low as 7 percent, he said.

The United States also offered to lower tariffs on metals, one of Canada's most important priorities.

On aluminium, according to the NYT interview, the U.S. had offered to reduce its tariffs to 25 percent from 50 percent without such a quota limitation, Mr. Greer said.

It is also reported that for products made with steel and aluminium, like golf clubs and beer cans, the United States offered to cut those tariffs by anywhere from 10 to 25 percentage points, with the lowest tariffs set at 15 percent.

The United States had further offered to suspend the 50 percent tariffs that it brought into effect early Saturday morning on Canadian dairy, wine, hockey sticks, and other goods. "Obviously, we would completely suspend the 50 percent Section 338 tariffs that we were going to apply to 5 percent of Canadian exports," he said, referring to the tariffs that went into effect Saturday.

Global Trade Wars

More than a week ago, Brazil's President Lula da Silva signalled that his government has triggered an economic reciprocity law mechanism against tariffs imposed by the U.S., insisting that the move was intended to show that his nation must be respected, according to a Reuters news agency report.

"Yesterday, we invoked the reciprocity law to show that we are not to be taken lightly," he told Brazilian podcasters on 14 August. "We respect ourselves. I am very calm knowing what could happen, and I am prepared to debate the defense of Brazil anywhere in the world."

"I don't want any fight with the United States," the Brazilian President said, but "unfortunately they are spreading falsehoods."

In short, the more trade or military wars the current "predatory hegemon"—a term coined by Harvard academic Stephen Walt in his article on “How Trump Wields American Power,” in Foreign Affairs in the March/April issue—creates, the more it could find itself in costly quagmires, said analysts.

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