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.Mr Carney responded:"Last-minute changes in the US proposed terms were unfair, uneconomic, and called into question the reliability of any deal."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".No further talks have been planned. 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.Typically cooperative alliance goes sourThe 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.The tariffs were initially supposed to kick in at 12:01am on Wednesday. Donald Trump said on Friday that he expected the US to strike a trade deal with Canada. (AP: Manuel Balce Ceneta)Mr Trump extended the deadline for three days to allow talks to continue, but the two countries still could not reach an agreement in time.The two nations have wrangled for decades over trade, poking each other over sore spots like Canadian softwood lumber imports and US access to Canada's protected dairy market.Somehow, they still managed to remain friends, allies and trading partners.Mr Trump's approach to dealing with Canada marks an extraordinary departure from the traditionally cooperative relationship between the two countries. He has hit Canadian goods with tariffs, in a push to bring manufacturing back to the United States, and has repeatedly made inflammatory comments about turning Canada into America's 51st state.Canadians and Americans are frustratedThe Canadian public is fed up. A petition to expel the US ambassador, a Trump ally, has collected nearly 248,000 signatures since July 21. It accuses Ambassador Pete Hoekstra of having "normalised'' Mr Trump's talk of annexing Canada, among other things.The two countries had good reasons to find a compromise.Donald Trump's import taxes will apply to about 5 per cent of what Canada ships to the US every year. (AP: Mark Schiefelbein)Nearly 72 per cent of Canada's goods exports last year went to the United States. And the Trump administration might be wary of imposing a hefty new tariff, paid by US importers who try to pass along the cost to consumers via higher prices, ahead of November’s midterm elections. American voters are already frustrated with the high cost of living."Canada likely wanted further sector-specific relief than the US was willing to offer, or Canada's concessions did not go far enough,'' said Ryan Majerus, a partner at King & Spalding and a former US trade official. "Either way, I think both sides will be under immense pressure in the coming days to still find an off-ramp. But if Canada has agreed to also impose tariffs, the off-ramp may be even harder to find."Candace Laing, president and CEO of the Canadian Chamber of Commerce, called the tariffs "a body blow to North American competitiveness," warning they would raise costs for Americans while threatening Canadian customers, investment and small businesses.The rift comes as the United States, Mexico and Canada are trying to renew a trade agreement that Mr Trump negotiated in his first term and once praised as a triumph.The United States has begun formal talks with Mexico over revamping the US-Mexico-Canada Agreement (USMCA). But talks with Canada have not begun, and the escalating trade conflict casts doubt on whether they will."Canada told the Americans in advance that if these tariffs landed, it would stop negotiating and retaliate,'' said Barry Appleton, senior fellow at the Center for International Law at New York Law School. "The American trade representative said publicly he would not tolerate retaliation. Both sides have now committed themselves in public, which is how escalation stops being a choice.''AP