NEW DELHI: Canada is set to impose retaliatory tariffs on US goods from September 8 after last-minute trade negotiations between the two countries collapsed, escalating tensions between the long-standing allies.

Prime Minister Mark Carney announced the measures after the United States imposed 50% tariffs on around $20 billion worth of Canadian imports. Canada has vowed to respond on a “dollar-for-dollar” basis, with measures expected to target US steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics.

Carney said the latest US proposals were unfair and economically damaging to Canada. Ottawa objected in particular to US demands concerning automobiles, Canada’s ability to pursue independent trade agreements and issues related to Canadian cultural sovereignty.

The latest US tariffs came into effect on August 22, adding to existing duties on Canadian steel, aluminium, vehicles and other products. The measures have raised concerns about a broader trade war that could disrupt supply chains, increase costs for businesses and consumers, and further weaken economic ties between the neighbouring countries.

The collapse of negotiations also puts further pressure on the future of the United States-Mexico-Canada Agreement (USMCA), which underpins a huge volume of trade across North America. Canadian political leaders have largely backed Carney’s decision to reject what Ottawa described as unacceptable US demands.

US President Donald Trump has meanwhile defended the tariffs and criticised Canada’s trade policies, signalling that tensions could persist. The dispute marks another major deterioration in relations between Washington and Ottawa and is likely to accelerate Canada’s efforts to diversify its trade and reduce its dependence on the US market.