WASHINGTON (DTN) -- A week of United States-Canada trade negotiations ended without a deal Friday, sending 50% tariffs on Canadian goods into effect Saturday and prompting Canada to prepare retaliatory measures.

During line-by-line negotiations in Washington, last-minute changes reported by both sides made an agreement unattainable.

The U.S. tariffs on Canadian dairy, steel, automotive products and other goods took effect at 12:01 a.m. Saturday. In total, $20 billion worth of goods fall under the new duties, with no new talks scheduled.

"You're at war when you're attacked, and we got attacked," Canadian Prime Minister Mark Carney said during a press conference on Saturday.

Canada's dollar-for-dollar retaliatory tariffs are expected to take effect the day after Labor Day.

Earlier in the week, President Donald Trump expressed optimism about reaching a deal. "Our farmers were paying tremendous tariffs into Canada and those tariffs are going to be eviscerated, down to zero," he said, likely referencing Canadian dairy.

Throughout the week, negotiation teams worked toward a deal that would reduce tariffs on Canadian steel in exchange for greater Canadian dairy-market access and provincial restrictions on American alcohol.

(See: "Canadian Dairy Policy Again Looms Large," https://www.dtnpf.com/…)

But in an interview with the New York Times, Greer said the U.S. offered to eliminate the 10% softwood lumber tariff, reduce the 25% auto tariff to as low as 7% and cut steel and aluminum tariffs from 50% to 25%. The deal also would have suspended the new 50% Section 338 tariffs on about 5% of Canadian exports.

However, the proposed deal fell apart after both sides introduced or objected to changes during the final stages of negotiations.

New trade terms for Canadian parts in vehicles were introduced during the final stages of negotiations, making Canadian automotive production "more uneconomic over time," Carney said. The U.S. also sought restrictions on Canada's ability to pursue other trade agreements. "We're the partner of choice in many respects. And the Americans wanted to restrict that," he said.

American officials also claimed Canada introduced new demands and walked back previous commitments but did not specify what those changes were.

DAIRY AND AG PRODUCTS

Agriculture emerged as a sticking point in the negotiations, particularly Canada's dairy supply-management system.

In a list of 13 demands, the U.S. sought to "dismantle Canada dairy supply management entirely."

Early Sunday morning, Trump posted on Truth Social, "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!"

Carney said the new terms "weren't economic, (were) unfair and undermine the net benefits for Canada and called into question the reliability of any deal."

Both countries are moving forward with no further talks scheduled. "We're moving forward with measures that respond to Canadian retaliation," Greer told Fox over the weekend.

Trump's decision to invoke Section 338 trade authorities originated from contention over Canadian dairy import quotas and Canadian treatment of U.S. motor vehicles and alcohol.

But products such as seeds, honey, floriculture products, flower bulbs, lumber and animal products were also included on the tariff list.

Greer has since said those products would have been excluded if a deal was inked Friday.

U.S. agriculture groups had not yet fully reacted to Saturday's announcement because the impact on agricultural trade was still unclear and retaliatory tariffs had not yet been implemented.

Michael Harvey, executive director of the Canadian Agri-Food Trade Alliance, told DTN the tariffs undermine integrated supply chains and create uncertainty over the future of the United States-Mexico-Canada Agreement (USMCA).

"American farmers and consumers benefit from the integrated supply chains built up with Canada over the years, and it is in their interest to get back to stability in the trading relationship," he said.

Canadian dairy processors exported $585 million in dairy products to the U.S. last year, while the U.S. exported $1.3 billion in dairy products to Canada.

If Canada follows through with retaliatory tariffs, U.S. importers would pay additional duties on covered Canadian goods. Importers may absorb those costs or pass them through the supply chain, potentially resulting in higher prices for businesses and consumers.

U.S. tariffs imposed under Section 338 don't require an investigation or a specified end date, raising concerns about the future of integrated North American supply chains and the USMCA.

Canadian Prime Minster Mark Carney's statement: https://www.pm.gc.ca/…

Jake Zajkowski can be reached at jake.zajkowski@dtn.com

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