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Canada had sought concessions on tariffs on steel, aluminum, autos and lumber. “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,” U.S. Trade Representative Jamieson Greer said in a statement read to reporters shortly before midnight.

U.S. Trade Representative Jamieson Greer told reporters in a White House briefing on Friday night that "Canada declined to finalize the trade deal under the terms agreed earlier this week."

"Tonight, Canada declined to finalize the trade deal under the terms agreed earlier this week," the United States Trade Representative wrote on X early Saturday morning.

“Tonight, Canada declined to finalize the trade deal under the terms agreed earlier this week,” Greer said in a statement.

Details leaked to several media outlets suggest the US will agree to reduce tariffs on Canadian steel and aluminium from 50% to 25%, and tariffs on Canadian automobiles from 25% to 15%.

President Trump’s import taxes will hit about 5% of what Canada ships to the United States every year, including products ranging from hockey sticks to tongue depressors.

The Trump administration signed three proclamations to impose the additional 50% tariffs on a range of Canadian goods in July, a response it said was due to trade discrimination against multiple U.S. products and industries such as motor vehicles, alcohol and dairy. The tariffs fell under Section 338 of the Tariff Act of 1930, which gives the president the power to impose tariffs of up to 50% on the goods of countries found to be discriminating against the U.S., and which had not been used since 1949.

So Trump has looked for other legal authority to justify tariffs. To hit Canada, he reached back to the Great Depression, invoking Section 338 of the Tariff Act of 1930 to threaten 50% tariffs on products that account for about 5% of Canadian exports to the United States.

Nearly a century ago, with the U.S. and world economies in collapse, Congress passed the 1930 tariff law, imposing taxes on imports from around the world. Known as the Smoot-Hawley tariffs after their congressional sponsors, they are notorious among economists and historians for limiting world commerce and making the Great Depression worse.

“Canada likely wanted further sector-specific relief than the U.S. was willing to offer, or Canada’s concessions did not go far enough,” said Ryan Majerus, a partner at King & Spalding and a former U.S. trade official. “Either way, I think both sides will be under immense pressure in the coming days to still find an off-ramp. But if Canada has agreed to also impose tariffs, the off-ramp may be even harder to find.”

Candace Laing, president and CEO of the Canadian Chamber of Commerce, called the tariffs “a body blow to North American competitiveness,” warning they would raise costs for Americans while threatening Canadian customers, investment and small businesses.

“Canada told the Americans in advance that if these tariffs landed, it would stop negotiating and retaliate,” said Barry Appleton, senior fellow at the Center for International Law at New York Law School. ”The American trade representative said publicly he would not tolerate retaliation. Both sides have now committed themselves in public, which is how escalation stops being a choice.”

Premier Christine Fréchette also pushed back against quickly restoring U.S. alcohol to provincial stores, saying Quebec alone would decide whether American products return to shelves at the SAQ, the Quebec government corporation that controls most retail sales of wine and spirits in the province.

Canada currently allows a set amount of dairy imports at low tariffs. Once imports exceed that limit, much higher tariffs apply. The U.S. says Canada’s supply-management system makes it harder for American dairy producers to gain full access to the Canadian market.