Trade talks between the US and Canada hit a wall last week - over trucks. The main sticking point was whether commercial trucks should get the same tariff reductions as passenger vehicles.
US Commerce Secretary Howard Lutnick says Canada only raised the truck issue at the last minute, at 4 PM on Friday. He claims Prime Minister Mark Carney introduced new demands to derail the negotiations for political advantage ahead of upcoming Alberta and Quebec elections.
Canadian officials tell a different story. They say the truck tariff debate had been on the table for weeks.
The breakdown came as US Trade Representative Jamieson Greer's office was closing in on a deal. Lutnick, who took a more active role in the final stages, reportedly pushed back against terms he saw as too friendly to Canada.
Within hours of the collapse, the US announced 50% tariffs on $20 billion of Canadian goods. Canada fired back with plans for retaliatory tariffs set to begin September 8, though their rate increases will be more modest.
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The spat goes beyond economics. President Trump stoked tensions by renaming Lake Ontario as "Lake America," a move that played better on social media than in diplomatic circles.
Lutnick didn't mince words about why he thinks the talks failed: "We're just being used by them, right? That's why it ended. It didn't happen for math. The math was sensational, it's a great deal that we shook hands." He accused Canada of adding last-minute demands "in order to make it end."
Trade wars rarely stay contained. The 50% US tariffs will hit specific Canadian industries hard, while Canada's reciprocal measures will squeeze American exporters. Companies with cross-border supply chains should brace for turbulence.
The September 8 start date for Canadian tariffs gives businesses a few weeks to adjust - but not much. Investors with exposure to US-Canada trade should review which products face new duties and how quickly companies can adapt.
One silver lining: The spat focuses on specific goods rather than blanket tariffs. That creates opportunities to shift portfolios toward sectors less affected by the trade tensions. As always in trade wars, the winners will be those who spot the ripple effects early.