The United States and Canada, longtime allies along an undefended border, slid deeper into a trade war on Saturday, trading angry recriminations and new tariffs that are expected to raise prices for products in both countries.

Each side blamed the other for the collapse of negotiations in Washington late Friday. The failure led the U.S. to impose 50% tariffs on $20 billion worth of Canadian goods, while Canada set Sept. 8 as the start of its retaliatory penalties.

President Donald Trump's import taxes will hit about 5% of what Canada ships to the United States every year, ranging from hockey sticks to tongue depressors. Prime Minister Mark Carney, a former central banker who led both the Bank of Canada and the Bank of England, said Ottawa would respond with targeted tariff protection for industries exposed to the new U.S. duties, including some steel products. He also cited the dairy, appliance, agricultural equipment, pulp and paper, and electronics sectors.

No further talks were planned. Whatever the eventual outcome, a loss of trust has emerged as one of the earliest casualties of the dispute.

Carney accused Washington of using "economic integration as a weapon" and said "its signature was written in pencil." Reaching for the language of battle, he said his country had been "attacked" by the new American tariffs. "You're at war when you get attacked," he said, adding that Canada has the reserves, the resilience and a plan to respond.

To Trump's chief trade negotiator, Jamieson Greer, however, the United States was compelled to act after a year of retaliation by its longtime partner.

"We've said enough, and so we've taken countermeasures. Our interest is in protecting American workers and protecting American supply chains," the U.S. trade representative, a onetime chief of staff to Trump's first-term trade chief Robert Lighthizer, told "Fox & Friends Weekend."

Carney said Canada had been willing to drop its remaining retaliatory tariffs on steel, aluminum and autos if the U.S. substantially lowered its own, and to encourage provinces to restore U.S. alcohol sales. But he said Washington's final demands went too far. "They asked too much and offered too little," Carney said.

Greer said the Republican administration was offering to cut tariffs on steel, autos and lumber, "things that are sensitive for them. And they've always had the best deal, and they still would have an even better deal, but they didn't want that."

As a result, he said, "We're moving forward with measures that respond to Canadian retaliation."

Carney said the U.S. added last-minute terms that would have reduced tariff relief for Canadian-made vehicles, restricted Canada's ability to strike trade deals with other countries, and weakened protections for language, culture and sovereignty. Such demands, he said, were "unacceptable."

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.

Ontario Premier Doug Ford, who leads Canada's most populous province, praised Carney for rejecting the deal, saying it would have hurt Ontario's auto, steel and manufacturing sectors. Ford urged Canada to use "every tool in our toolbox" to fight the U.S. tariffs. The exposure runs in both directions: North American auto manufacturing is so integrated that parts and unfinished vehicles routinely cross the border several times before a finished car is assembled.

The moves also call into question the future of the North American trade agreement covering the United States, Canada and Mexico that is crucial to industry in all three countries. Carney said the breakdown was "certainly not good news" for the review of that agreement, and that the failed negotiations had given Canada "a new perspective" on what Washington wants from the broader economic relationship.

The political impact will likely be even bigger than the economic fallout. The two countries sold each other $880 billion worth of goods and services last year.

The tariffs were initially supposed to kick in at 12:01 a.m. Wednesday. Trump extended the deadline by three days to allow talks to continue, but the countries could not reach an agreement in time.

A relationship under strain

The U.S. and Canada have wrangled for decades over trade, poking each other over sore spots such as Canadian softwood lumber imports and U.S. access to Canada's protected dairy market. Somehow, they still managed to remain friends, allies and trading partners. Canadian soldiers fought alongside Americans in Afghanistan after 9/11. The 5,525-mile U.S.-Canada border is undefended, and nearly 330,000 people and $2 billion worth of goods cross it every day; 800,000 Canadians live in the United States.

Trump's approach to dealing with Canada marks an extraordinary departure from that traditionally cooperative relationship. He has imposed tariffs on Canadian goods in a push to bring manufacturing back to the United States and has made inflammatory comments about turning Canada into America's 51st state.

Carney said Canada had recognized that "America has changed" and that the two countries would "not return to our old relationship."

The Canadian public is fed up. A petition to expel U.S. Ambassador Pete Hoekstra, a Trump ally, has collected nearly 248,000 signatures since July 21. It accuses the former Republican congressman from Michigan of having "normalized" Trump's talk of annexing Canada, among other things.

Pressure to find an off-ramp

The two countries had good reasons to find a compromise. Nearly 72% of Canada's goods exports last year went to the United States. The Trump administration might be wary of imposing new tariffs — paid by U.S. importers who try to pass along the cost to consumers via higher prices — before the November midterm elections, with American voters already frustrated by the high cost of living. Canada's penalties, for their part, are not set to begin until Sept. 8 — one of the few fixed points in a dispute with no further talks planned.

"Both sides will be under immense pressure in the coming days to still find an off-ramp," said Ryan Majerus, a partner at King & Spalding and a former U.S. trade official.

Joshua Bolten, CEO of the Business Roundtable, which represents leaders of major U.S. companies, warned the tariffs and retaliation risk "raising costs for American businesses and families" and disrupting vital supply chains, and urged both governments to resume negotiations.

A new legal pathway for tariffs

Trump has made tariffs the centerpiece of his second-term economic agenda. Last year, he imposed double-digit import taxes on almost every country, justifying them by declaring the long-standing U.S. trade deficit a national emergency.

The Supreme Court in February ruled that he had overstepped his authority. The justices struck down the trade penalties and set the stage for the federal government to pay refunds to importers. Trump has since looked for other legal authority to justify tariffs.

For Canada, he invoked Section 338 of the Tariff Act of 1930, a rarely used Depression-era provision allowing tariffs of up to 50% against countries deemed to discriminate against U.S. businesses. The provision is part of the Smoot-Hawley tariff law, widely blamed by economists and historians for worsening the Great Depression by restricting global trade — and it has never previously been used to impose tariffs.

The rift comes as the United States, Mexico and Canada are trying to renew a trade agreement that 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, known as USMCA, which replaced NAFTA in 2020. But talks with Canada have not begun, and the escalating trade conflict casts doubt on whether they will.

This story was originally featured on Fortune.com.