Trade talks between the U.S. and Canada broke down on Friday, officials from both countries said, paving the way for the U.S. to impose 50% tariffs on about $20 billion worth of Canadian goods early on Saturday and risking escalation into an all-out trade war.

The neighboring nations had been locked in intense negotiations after President Trump extended an earlier tariff deadline set for Wednesday and indicated a deal could be close to final. Canadian Prime Minister Mark Carney congratulated negotiators from both countries this week for having made "significant progress" in the trade talks, and Ottawa's minister in charge of U.S.- Canada trade said Thursday that the two sides were "very close" to an agreement.

However, U.S. Trade Representative Jamieson Greer told reporters that talks broke down on Friday night, despite what he said was an offer from the Trump administration to offer Canada the "best treatment" of any major U.S. trading partner. Without a deal, the new tariffs, which apply to about 5% of Canada's U.S.-bound exports, went into effect at 12:01 a.m. on Saturday morning.

Carney, conversely, said Friday that last-minute changes from the U.S. side "were unfair, uneconomic, and called into question the reliability of any deal." He said that he would impose dollar-for-dollar retaliatory tariffs on U.S. goods and introduce support for Canadian workers in the coming days.

"In recent weeks, we made important progress toward improving Canada's position as having the best deal in the world with the U.S.," Carney said in a statement. "However, that progress has not been enough to meet our objectives for Canadians."

The Trump administration first threatened the latest round of tariffs last month, saying they would be imposed in response to Canada's provincial bans on American alcohol, protections for its domestic dairy industry and quotas and tariffs on some U.S. vehicles.

Many of Canada's recent trade actions against the U.S. were put in place in retaliation for earlier levies imposed by Trump, including his sector-specific levies of up to 50% on automobiles, steel, aluminum and forest products. Though most Canadian exports have avoided those duties because they complied with the U.S.-Mexico-Canada Agreement, the new round of tariffs don't exempt such products.

The 11th-hour collapse in negotiations injects fresh tension into a bilateral relationship between traditionally close allies that has rarely been worse. Since returning to the White House, Trump has put Canada in his crosshairs, imposing tariffs on its goods, threatening to use "economic coercion" to make it the 51st state and calling its prime ministers "governor." The tariffs and threats against Canada's sovereignty have enraged Canadians, many of whom have boycotted U.S. travel and products.

The trade talks had been largely stalled since the fall, after Trump suspended discussions over an ad paid for by the province of Ontario that featured audio of President Ronald Reagan criticizing tariffs. But in recent weeks, there appeared to be positive momentum toward a deal.

Dominic LeBlanc, Canada's minister in charge of U.S.-Canada trade, and Janice Charette, Canada's chief U.S. trade negotiator, had camped out in Washington for several weeks to meet with U.S. counterparts, including Greer and Commerce Secretary Howard Lutnick. Trump and Carney spoke several times by phone this week.

The U.S. had considered a plan that included cutting its steel and aluminum tariffs on Canada in half, as well as lowering automotive tariffs. In a meeting with Canada's provincial premiers this week, Carney told them to be ready to put U.S. alcohol back on the shelves in the event of a deal.

The new U.S. tariffs come six months after the Supreme Court threw out many of Trump's tariffs that relied on a novel interpretation of federal emergency law. The new levies on Canada similarly rely on a section of trade law that has never been used before, and are likely to draw legal challenges in the coming days.

Trump's move also casts further doubt over the future of the U.S.-Mexico-Canada Agreement, which was negotiated during Trump's first term to replace Nafta. That deal is now under review after the Trump administration declined to renew it in its current form earlier this summer, and the president has repeatedly floated withdrawing from the trilateral pact altogether. Formal talks on the deal have not been opened between the U.S. and Canada, and the U.S. offered in recent days to include new USMCA talks in a deal to avert tariffs, according to a statement posted on X by USTR.

Throughout the talks, Canadian officials have sought a deal that would lower previous sectoral tariffs and stave off the latest round of levies. In return, Canadian officials proposed making certain concessions, including pressing provincial leaders to put U.S.-made alcohol products back on shelves and widening U.S. access to the dairy market, people briefed on the negotiations said.

Carney, a former central banker, came to power last year by pitching himself as the experienced economic crisis manager who could best stand up to Trump and navigate the rupture in bilateral ties. He has repeatedly said that he wouldn't accept a "bad deal" with the U.S. and has sought to diversify Canada's trade to non-U. S. markets.

Polls show most Canadians support taking a hard-line approach in trade talks, even if it prolongs economic hardship. Just 18% back making concessions to get a deal, according to an Abacus Data survey this week.