Canada, US Head toward Trade War as Sec 338 Trade Law Stops in for 50% Tariff

[ABS News Service/24.08.2026]

Canada and the United States appear headed for a trade war that could threaten the US-Mexico- Canada Agreement after negotiators from the two sides were unable to reach agreement on a deal to avoid the US imposition of 50 percent tariffs on Canadian products.

The US tariffs on over $20 billion worth of Canadian goods – are being imposed under the Section 338 trade law that has never been used before – took effect at midnight on Saturday.

Canadian Prime Minister Mark Carney said Saturday morning that his country will impose reciprocal retaliatory tariffs on US products beginning September 8.

Ottawa will “match Washington’s new tariffs dollar for dollar in order to protect Canadian workers, farmers, families and businesses.”

The Canadian tariffs will apply to products including steel, dairy, appliances, agricultural equipment, pulp and paper and electronics, he said.

Mr. Carney ordered his trade negotiating team to return to Ottawa after talks with the United States were unsuccessful.

Last Minute Changes

The Prime Minister said the two sides were close to a deal until Washington tried to add new commitments at the eleventh hour. “In short, they asked too much and they offered too little. You’re at war when you get attacked. We got attacked,” he said. He said last-minute issues included Washington’s refusal to cut tariffs on medium and heavy trucks – something the Canadian side believed had been agreed to and US insistence that Canada could not negotiate trade deals with other countries.

But US Trade Representative Jamieson Greer argued on social media that the US offer was “the best treatment of any major exporter to our market.” He accused the Canadian side of making new demands and walking back from previous commitments. He said Washington offered “significant tariff reductions on steel, aluminum, autos and lumber.”

President Trump said “Canada wants the benefits of being a State, without being one!!! They have also charged our great farmers, for many years, massive amounts of Tariffs. No more!!!”