Canada, Malaysia quit talks — Canada–US trade negotiations collapse, derailing Trump's tariff push

Trade talks are the story here, but the real stakes are tariffs — who keeps them, who blinks first, and whether Trump can still turn tariff threats into actual deals. On May 5, that strategy took two hits at once. Canada’s negotiations with the U.S. broke down after a brief burst of optimism, and Malaysia had already become the first country to formally walk away from its own White House tariff deal. The pattern matters because Trump has been trying to rebuild leverage after the Supreme Court undercut his broad “Liberation Day” tariff authority in February. (politico.com) ### What blew up between Canada and the U.S.? The short version is autos. Politico’s account says the two sides had momentum and were sketching an interim deal covering steel, aluminum, uranium, and energy, with a target of finishing before American Thanksgiving. But the North American auto sector was being left out, and that tu(politico.com)ere dead. (politico.com) ### Wasn’t Trump blaming a Canadian ad? Yes — but that looks more like the public explanation than the actual reason. Trump pointed to Ontario Premier Doug Ford’s C$75 million anti-tariff ad campaign, which used Ronald Reagan clips and attacked the tariff logic. But the reporting says officials on both sides treated the ad as a (politico.com)ing while other sectors got relief. (politico.com) ### Why were autos the hard part? Because Canada never really gave them up. Ottawa removed many of its 2025 countertariffs, but it kept tariffs on steel, aluminum, and automobiles in place while negotiations continued. Canada’s auto countermeasures include 25% tariffs on non-CUSMA-compliant vehicles imported from the U.S. and 25(politico.com)issue — it goes straight at one of the most integrated manufacturing chains in the world. (canada.ca) ### What did Canada think it was doing? Basically, buying leverage and time. Canada’s government has been framing the whole approach as protecting workers and preserving preferential access to the U.S. market while preparing for the coming CUSMA review. Even in late April, Ottawa was still building(canada.ca)ook less like a planned rupture and more like a negotiation that hit the one sector neither side could fudge. (canada.ca) ### Where does Malaysia fit into this? Malaysia shows the problem is bigger than Canada. The U.S. and Malaysia signed a reciprocal trade agreement in October 2025 that kept a 19% U.S. tariff rate on Malaysian goods while offering some zero-rate carveouts and mark(canada.ca)that cancellation. (whitehouse.gov) ### Why does that matter for Trump’s tariff push? Because tariff diplomacy only works if partners think the deal will stick. Malaysia’s cancellation, plus Canada’s failed talks, suggests the opposite problem — countries may decide that waiting out Washington is safer than locking into (whitehouse.gov)n countries facing Section 301 pressure anyway. In other words, even making a deal may not get you out of the line of fire. (foreignpolicy.com) ### So what’s the bottom line? Trump’s tariff project is no longer just a question of legal authority. It is now a credibility problem. Canada and Malaysia are very different cases, but together they show the same thing — the U.S. can still threaten tariffs, but turning those threats into durable settlements is getting harder. (politico.com)