Trade talks between the United States and Canada collapsed late Friday night, just minutes before a midnight deadline, triggering steep new 50% tariffs on tens of billions of dollars in Canadian goods and prompting Ottawa to promise immediate retaliation. The breakdown came only hours after President Trump told reporters negotiators had "pretty much" struck a deal, according to NPR's reporting on the collapse.

The new duties, imposed under Section 338 of the Tariff Act of 1930 — a provision no administration has ever previously deployed — took effect at midnight and cover an estimated $20 billion in annual U.S. imports from Canada, hitting everything from hockey sticks and building materials to wine and clothing. The tariffs arrived after Trump had paused an earlier round for three days earlier in the week, saying at the time he believed an agreement was close.

Carney Blames "Unfair" Last-Minute Changes

Canadian Prime Minister Mark Carney suspended negotiations and ordered his team home to Ottawa, saying the U.S. side introduced terms at the eleventh hour that undercut weeks of progress.

"Last-minute changes in the U.S. proposed terms were unfair, uneconomic, and called into question the reliability of any deal," Carney said, adding that "Canada will match those tariffs dollar for dollar to protect our workers and businesses."

U.S. Trade Representative Jamieson Greer offered a starkly different account, telling reporters that Canada "declined to finalize the trade deal" after making new demands and walking back earlier commitments, even as Washington had offered relief on steel, aluminum, autos and lumber tariffs. Greer said in a statement carried by NBC News that "we don't have new talks planned with the Canadians" and that the U.S. would "respond to Canadian retaliation."

One flashpoint in the talks, according to NBC's reporting, was Carney's push to get provincial premiers to lift bans on American alcohol sales that several provinces imposed last year in response to earlier Trump-era tariffs. Canada's premiers are now split on how hard to hit back: Ontario's Doug Ford pledged "full support for a strong response — tariff for tariff, dollar for dollar," while British Columbia's David Eby vowed to "keep fighting for as long as it takes." Alberta's Danielle Smith struck a more conciliatory note, urging both governments to "restart negotiations as soon as possible."

Markets and industry groups on both sides of the border were bracing for fallout Friday night, with Bloomberg reporting that Canadian officials were preparing a retaliatory package expected to mirror the U.S. duties dollar for dollar within days.

No new negotiating sessions are currently scheduled, and trade lawyers say the untested use of Section 338 authority is likely to draw legal challenges in U.S. courts. For now, the 50% tariffs remain in effect on both sides of what has become the most serious rupture yet in the Trump administration's trade relationship with its largest trading partner.