Canada to retaliate against US with tariffs following failed trade negotiations

Canada says it will retaliate after the United States imposed 50 per cent tariffs on $US20 billion ($AU27.9 billion) worth of Canadian products.

After last-ditch negotiations failed to resolve the latest strain in relations between the historic allies, Canadian Prime Minister Mark Carney said on Saturday that the retaliatory tariffs would come into effect on 8 September.

"In the coming days, we'll release details of these new tariff measures, measures which will come into force the Tuesday after Labor Day," Mr Carney told a news conference in Ottawa.

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

Canada's dollar-for-dollar retaliation will target steel, dairy, appliances, agricultural equipment, pulp and paper and electronics.

Mr Carney disclosed that Canada had been willing to drop remaining retaliatory tariffs on steel, aluminium and autos if the United States substantially lowered its own, and to encourage provinces to restore US alcohol sales.

But he said Washington's final demands went too far, saying, "They asked too much and offered too little."

Future trade agreement in question

The retaliation also calls into question the future of a North American trade agreement covering the United States, Canada and Mexico that is crucial to industry in all three countries.

Canada had sought concessions on tariffs on steel, aluminium, autos and lumber.

"Tonight, Canada declined to finalise the trade deal under the terms agreed earlier this week. 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 up-ended the careful balance reached in the past days," US Trade Representative Jamieson Greer said in a statement read to reporters shortly before midnight.

Mr Carney blamed the Republican administration for the breakdown, saying "last-minute changes in the US proposed terms were unfair, uneconomic, and called into question the reliability of any deal".

He said his government would announce additional support for Canadian workers and businesses in the coming days.

Mr Greer said the US offer was "forward-looking" and included "a historic economic and national security partnership".

No further talks are planned.

Canada and America won't 'return to our old friendship'

The breakdown in negotiations marked a sharp reversal from two days earlier, when officials from the two countries sounded as if they were headed toward a compromise.

Mr Carney said Canada's goal throughout the negotiations had been to secure the best possible agreement, "never a deal at any price or on any deadline".

The US tariffs on Canada were initially supposed to kick in at 12:01am. Wednesday, local time. Mr Trump extended the deadline for three days to allow talks to continue, but the countries could not reach an agreement in time.

The US and Canada have wrangled for decades over trade, poking each other over sore spots such as Canadian softwood lumber imports and US access to Canada's protected dairy market.

Somehow, they still managed to remain friends, allies and trading partners. Canadian soldiers fought alongside Americans in Afghanistan after 9/11. Nearly 330,000 people cross the US-Canada border every day. 800,000 Canadians live in the United States.

Mr Trump's approach to dealing with Canada marks an extraordinary departure from the traditionally cooperative relationship between the two countries. He has imposed tariffs on Canadian goods in a push to bring manufacturing back to the United States and made inflammatory comments about turning Canada into America's 51st state.

Mr Carney said Canada had recognised that "America has changed" and that the two countries would "not return to our old relationship".