Canada has announced that it will match new US tariffs on Canadian goods “dollar for dollar” after last-minute trade negotiations between the two countries broke down.

Canadian Prime Minister Mark Carney announced the suspension of trade talks shortly before the deadline, saying recent changes to the US proposal were unfair, uneconomic and raised concerns about the reliability of any future agreement.

The two countries had been engaged in intensive negotiations since July after US President Donald Trump threatened to impose a 50% tariff on nearly $20bn worth of Canadian imports. Trump had temporarily paused the tariffs earlier in the week, saying the US and Canada were close to reaching a trade deal that would be beneficial for both countries.

Despite making what Carney described as “important progress,” Canada said the negotiations had not gone far enough to meet its objectives. Carney directed Canadian trade negotiators to return to Ottawa and confirmed that Canada would respond to US tariffs with reciprocal measures.

The development marks a fresh escalation in trade tensions between Canada and the United States, with businesses and consumers on both sides potentially facing higher costs as the two countries continue to negotiate their future trade relationship.