US-Canada supply chains face uncertainty as trade talks collapse

U. S. -Canada trade negotiations collapsed just hours before a deadline to avert steep new tariffs, sending the two countries into an escalating trade dispute that could ripple through trucking, automotive manufacturing and cross-border supply chains. The United States imposed 50% tariffs on billions of dollars of Canadian goods beginning at 12:01 a. m.

ET Saturday after negotiators failed to reach an agreement Friday. The affected imports include products ranging from cement and dairy products to hockey sticks and other goods. Canada is the second-largest trading partner of the United States, behind Mexico. In June, cross-border freight between the U. S. and Canada totaled $67.

9 billion, according to the Bureau of Transportation Statistics. The two countries have deeply integrated supply chains, particularly in motor vehicles, machinery and energy products such as crude oil. Canada has announced plans to retaliate against U. S. imports beginning Sept.

8, setting up the prospect of another round of tariff escalation between two of the world’s most integrated trading partners. U. S. Trade Representative Jamieson Greer on Monday blamed Canada for the breakdown, saying negotiators appeared close to an agreement Tuesday before Ottawa sought additional concessions during the final stages.

“We progressed to a point Tuesday night where we had enough agreement among the parties to announce that we had … found the way to a deal,” Greer told CNBC. But as negotiators worked to finalize the agreement, he said the Canadians “wanted more.”

Canadian Prime Minister Mark Carney offered a sharply different account, saying the Trump administration was making last-minute changes that Canada considered unfair and economically unacceptable.

Heavy-duty trucks emerge as sticking point One of the disputes with direct implications for the freight industry involved tariffs on medium- and heavy-duty vehicles. Mark Wiseman, Canada’s ambassador to the U. S.

, said Canada wanted medium- and heavy-duty vehicles included in tariff relief, while Washington resisted lowering tariffs on those vehicles, according to Bloomberg. The issue affects automakers including General Motors and Ford, which operate manufacturing facilities in Canada.

Wiseman said Canada wanted to protect its domestic assembly industry covering passenger vehicles, light trucks and medium- and heavy-duty trucks. The Trump administration’s proposed agreement would have offered tariff reductions covering Canadian steel, aluminum, automobiles and lumber, according to Greer. Canada ultimately rejected the terms.

Cross-border supply chains face new uncertainty For companies moving goods between the two countries, the biggest question may be whether the tariff escalation lasts days, weeks or becomes a longer-term feature of North American trade.

Dave Townsend, a partner in Dorsey & Whitney’s International Trade Group, said businesses are waking up to a dramatically different tariff environment. “The biggest question now is whether this is a temporary tariff hike or will last for some time,” Townsend said in a statement.

He said both governments have a strong incentive to continue negotiating rather than allowing tariffs and countermeasures to spiral.

Augustine Lo, an international trade attorney at Dorsey & Whitney, said the new tariffs represent a major departure from the largely duty-free trade businesses have come to expect between the United States and Canada since the North American Free Trade Agreement took effect in the 1990s.

Lo warned that Canadian retaliation could have repercussions across roughly $800 billion in annual goods trade between the countries, along with about $100 billion in services trade. Whether Washington and Ottawa return to the negotiating table before Canada’s retaliatory tariffs begin Sept. 8 remains uncertain.

Wiseman said communications between the two governments are continuing, but declined to say whether Canada is prepared to formally restart negotiations. Why it matters: The collapse of U. S.

-Canada negotiations turns a threatened tariff fight into a real cross-border cost, potentially disrupting hundreds of billions of dollars in annual trade while creating new uncertainty for trucking, automotive and industrial supply chains. The post US-Canada supply chains face uncertainty as trade talks collapse appeared first on FreightWaves.