Bilateral trade talks between the United States and Canada collapsed in late August 2026 after failing to finalize terms addressing U.S. concerns over Canadian tariffs and regulations on autos, dairy, and alcoholic beverages. The United States subsequently implemented 50% tariffs under Section 338 on roughly $20 billion of Canadian goods, with further product-list modifications effective mid-September and import prohibitions on select items beginning September 29. Canada responded with matching retaliatory surtaxes on U.S. exports starting September 8. Negotiations remain suspended, the Trump administration has signaled no immediate urgency for a deal, and the USMCA faces annual joint review without U.S. commitment to renewal in its current form. These developments have entrenched higher tariff barriers and reduced near-term prospects for diplomatic tariff reductions.