Moments ago, Canadian Prime Minister Mark Carney delivered the news via his X account.  Discussions between the U.S and Canada have collapsed. All trade representatives are called back home.  The 50% U.S. tariffs against Canada are now in effect.  A trade war begins.

First, read the statement from Prime Minister Mark Carney, with the understanding that Carney is making the first statement because the news is exceptionally bad for Canada.  Worse than bad.

[SOURCE]

When the 3-day tariff pause was announced, CTH said to be cautious.  When USTR Jamieson Greer and Canadian negotiator Dominic LeBlanc said the terms were “basically agreed”, again CTH said be careful.

The reason for our notes of extreme caution is because the divide between the two economies and trade policy is just too big.  There was no way for both sides to close the gap without major structural economic changes within Canada.  The issues are not points of friction, they are just too big and embedded within the laws of Canada that would have to change.

Banking regulations would have to change. Intellectual property and media rules, regulations and laws would have to change.  Industrial policy would have to change.  The Canadian energy policy would have to change.  The carbon trading scheme would have to change or be removed.  All of this would fall upon Canada to carry out in order to position their economy in alignment with the USA.  There’s literally no way for their government to accomplish this against the backdrop of their political ideology.

That was the structural argument and point made by former Prime Minister Justin Trudeau.  This is also why the USMCA as a trilateral trade agreement is impossible to maintain.  The only trade agreement construct possible is two clearly separate bilateral free trade agreements, one with Mexico and one with Canada.

The 50% tariffs begin tonight.

A trade war is underway.

This is breaking news.  More to come soon….

UPDATE: USTR Response

“Tonight, Canada declined to finalize the trade deal under the terms agreed earlier this week.

Despite the U.S. offer to Canada to receive the best treatment of any major exporter to our market, new demands and walk backs of other commitments by Canada have upended the careful balance reached in the past days. In addition, Canada is continuing to maintain its prolonged retaliation against the United States, including, among other things, flat-out prohibitions on certain American goods and services.

For decades, Canada has enjoyed the most favorable access to the U.S. market of any country. And from the beginning of President Trump’s trade program, Canada has continued to enjoy the best treatment in the world, even after – like China – retaliating against the United States. This week, the United States agreed to provide even better treatment to Canada, offering significant tariff reductions on steel, aluminum, autos, and lumber.

The U.S. offer was also forward looking, and included a historic economic and national security partnership to cooperate on export controls, combat transshipment, enhance digital trade, and align certain external tariffs. The offer would have led to supply chain coordination on aerospace, complementary actions to address unfair trade practices, critical minerals cooperation, increased enforcement against imports produced with forced labor, and the announcement of formal U.S.-Mexico-Canada Agreement (USMCA) negotiations.

This is a missed opportunity for Canada to partner with the United States, which is the fastest growing economy in the G7.” 

~ U.S. Trade Representative Jamieson Greer