shortly before the Friday night deadline, Canadian Prime Minister Mark Carney said he would impose reciprocal tariffs on US goods "dollar for dollar". Carney said "last-minute changes in the US proposed terms were unfair, uneconomic, and called into question the reliability of any deal". Trade negotiators had been engaged in intense talks since July, after President Donald Trump threatened to impose a 50 percent levy on nearly USD 20bn (CSD 28bn; 14bn pound) of Canadian imports by 19 August. Trump had temporarily paused those tariffs this  week, saying the two sides were close to signing a trade deal that was "very good" for both countries. But minutes before the deadline for a deal, Carney said that while "important progress" had been made in the talks it was "not enough to meet our objectives for Canadians". "As a result, this evening, I have decided to suspend trade negotiations with the US and have directed negotiators to return to Ottawa," he said. "Last-minute changes in the US proposed terms were unfair, uneconomic, and called into question the reliability of any deal". After Carney's announcement US trade representative Jamieson Greer said in a statement: "Tonight, Canada declined to finalise the trade deal under the terms agreed earlier. "Despite the US 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".

The breakdown in talks marks a significant shift in tone from earlier in the week, when both US and Canadian officials sounded optimistic that a trade deal beneficial for both countries was within reach. Negotiators were reportedly discussing a deal that would reduce US tariffs on Canadian steel and aluminium from 50 percent to 25 percent, and on Canadian autos from 25 percent to 15percent . In exchange, Carney had asked Canadian provinces to restore US alcohol to store shelves. The breakdown of the talks puts the US-Canada relationship in uncharted territory, and will be a major test for Carney's premiership. The two countries have developed one of the world's most deeply economically integrated trading relationships, and Canada sends approximately 70 percent of its exports south. But tensions between the two major trading partners have been simmering since Trump returned to office in January last year and unleashed a wide-ranging global programme of tariffs, upending decades of free trade between Canada and the US. Now that talks have broken down, Canada will be hit with new 50 percent US tariffs imposed by Trump using a Depression-era law called the Tariff Act of 1930. (BBC)