US-Canada trade negotiations collapsed Friday, in part over a last-minute standoff on cutting US tariffs on Canadian medium- and heavy-duty vehicles, according to people familiar with the matter.

The two countries had the outline of a deal that would have lowered US sectoral tariffs on autos, steel, aluminum and lumber, and negotiators remained locked in talks through Friday. But the sides stayed at odds over the treatment of larger vehicles, said the people, who spoke on condition of anonymity to describe private negotiations. The Canadians insisted on the additional relief in a phone call late Friday, and the Americans balked.

Under the agreement taking shape, the regular auto tariff would have been lowered to 15% from the current 25%, a levy Trump imposed in April 2025 under Section 232 national-security powers. The 15% level matches the rate Washington has already extended to the European Union and Japan in earlier trade deals. Canada wanted that relief expanded to medium- and heavy-duty vehicles, which typically range from large pickup trucks to commercial vehicles, a segment where North American supply chains are tightly interwoven and parts routinely cross the border several times before final assembly.

Canadian Prime Minister Mark Carney said Saturday that to deny such relief to trucks "is a big change, obviously." Without the tariff relief on trucks, he said, Ford's new plant in Ontario, which makes F-350s and larger pickup trucks, "would have been excluded. No rationale," he added. Ford retooled its Oakville, Ontario assembly complex to add Super Duty production, extending a heavy-duty truck line historically built at its plants in Kentucky and Ohio into Canada.

The US considered the request to be an additional demand that was not part of the deal, the people said. But one Canadian industry official said it was the Americans who tried to divide the industry.

"At the last minute, the Americans pulled that classification out of the class of product that would get a reduced tariff," Flavio Volpe, president of the Automotive Parts Manufacturers' Association, told the Canadian Broadcasting Corp. Saturday, referring to super-duty pickup trucks such as the Ford F-350s. Volpe suggested the impetus may have been to "get rid of auto manufacturing in Canada."

Both sides blamed each other for the sudden collapse of the talks, which resulted in the US imposing new 50% tariffs on approximately $20 billion in Canadian goods. The targeted products account for a slice of a trading relationship in which two-way goods flows have exceeded US$700 billion a year. On Saturday, Carney announced dollar-for-dollar counter-tariffs on American goods starting Sept. 8 (Canada Unveils $20 Billion Counter-Tariffs to Mirror Trump Levy). The Sept. 8 date now stands as the next marker for whether the negotiations can be revived.

Lana Payne, national president of Unifor, Canada's largest private-sector union, told reporters Saturday that Canada had no choice but to draw a line in the sand. She said autoworkers were concerned that agreeing to a tariff carveout on US parts only would lead to more aggressive demands when negotiating the wider North American trade pact, the US-Mexico-Canada Agreement, which is scheduled for a joint review by its three member countries in 2026.

"And eventually you're getting away from being able to have a competitive sector in Canada. And that was really problematic," she added.

Unifor had told the Carney government that it wanted auto parts compliant with the existing North American trade deal to be exempt from tariffs.

Carney's office declined to comment, while the White House and the office of the US Trade Representative did not immediately respond to a request for comment.