'They asked too much': Canadian dollar slides as Ottawa and Washington head for all-out trade war

The Canadian dollar fell on Monday morning after trade talks between Ottawa and Washington fell apart, leaving both sides facing higher prices on a wide array of imported goods.

The U.S. on Saturday slapped 50% tariffs on around $20 billion worth of imports from Canada, its second-biggest trading partner after Mexico. The affected goods span dairy, wine, wood products, ceramics and a slew of other areas.

Canadian Prime Minister Mark Carney said he would retaliate "dollar for dollar" with tariffs starting Sept. 8, targeting sectors such as steel, dairy, agricultural equipment, paper and electronics. Details will be released "in the coming days," Carney added.

The Canadian dollar was 0.55% lower against the U.S. dollar at 4:30 a.m. ET. The loonie also dipped against the euro, British pound and Japanese yen.

"As a smaller, more open economy, Canada has more to lose from this, but Prime Minister Mark Carney seems to have opened the door to more fiscal stimulus to support affected business," FX strategists at bank ING wrote in a Monday note.

Negotiators had been scrambling to strike a deal all week, with officials suggesting one was close. But rhetoric turned sour by the weekend, with each side blaming the other for failing to reach an agreement.

Carney said the U.S. had "asked too much and offered too little."

"We were not prepared to compromise Canada's sovereignty or undermine our key industries," he said.

"Canada wants the benefits of being a State, without being one!!!," Trump said in a post on Truth Social on Sunday. "They have also charged our great farmers, for many years, massive amounts of Tariffs. No more!!!"