US Commerce Secretary Howard Lutnick accused Canada of deliberately derailing trade negotiations by introducing sweeping new demands at the eleventh hour, collapsing what had reportedly been an emerging framework for a deal. The US responded by imposing new tariffs on roughly $20 billion worth of Canadian goods. Canadian Prime Minister Mark Carney promised dollar-for-dollar retaliation, setting the stage for a genuine trade war between the two countries that are each other’s largest trading partners. Talks collapsed between August 22 and 25, 2026, with Canada pushing for tariff relief on trucks, carve-outs for aluminum products, and protections for its dairy supply management system. The automotive and steel sectors are most exposed to this standoff, as US-Canada supply chains are deeply intertwined in both industries.
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