US, Canada fail to reach tariff deal, deepen trade war

The US has imposed 50 per cent tariffs on some Canadian goods, after the two longstanding allies failed to reach a trade deal.

Canada's Prime Minister Mark Carney says his country will retaliate "dollar for dollar" on the new tariffs.

The United States has imposed 50 per cent tariffs on $US20 billion ($27.9 billion) worth of Canadian products and Canada says it will retaliate.

Last-ditch negotiations failed to resolve the latest strain in already tense relations between the historical allies.

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 Prime Minister Mark Carney said his nation would match the US tariffs dollar for dollar, escalating the trade conflict and calling into the question the future of a North American trade pact between the United States, Canada and Mexico that is crucial to industry in all three countries.

Canada sought concessions on tariffs on steel, aluminium, autos and lumber that the United States was unwilling to provide.

US trade representative Jamieson Greer said in a statement, early Saturday local time:

"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," the statement said.

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".

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.

The political impact will likely be even bigger than the economic fallout. The countries sold each other $US880 billion worth of goods and services last year.