The United States and Canada have failed to reach a trade deal, and the US said it would impose 50% tariffs on some imports from Canada.
A senior administration official said Section 338 tariffs on about $20 billion worth of Canadian goods would go into effect just after midnight (5am Irish time).
Canada's Prime Minister Mark Carney said he had suspended trade negotiations and Canada would retaliate dollar for dollar on the new tariffs.
The decision by the US administration followed three days of talks in Washington between Canada's Minister for Trade with the US, Dominic LeBlanc, and US Trade Representative Jamieson Greer.
"I have decided to suspend trade negotiations with the US and have directed Canada's negotiators to return to Ottawa," Mr Carney said in a statement.
"They (negotiators) have worked hard, in good faith, to defend the interests of Canadians throughout these negotiations up until the very last minute," he said.
"However, last-minute changes in the US proposed terms were unfair, uneconomic, and called into question the reliability of any deal."
While the new measures affect a relatively small share of Canadian exports, they add to existing US tariffs on steel, lumber and autos which have battered Canada's economy, forced job losses, and strained what was once an ironclad trade relationship.
The new tariffs could thwart Canada's fragile economic recovery and impact how the two neighbours engage in the coming months on broader negotiations for a free-trade pact.
They apply regardless of whether Canadian goods qualify for preferential treatment under the US-Mexico-Canada trade agreement, which has shielded much of Canadian industry from earlier US tariffs.
US President Donald Trump had previously said the US "should be able to have a deal with Canada", citing his "good relationship" with Mr Carney.
Mr Trump had threatened to impose new 50% duties on a range of Canadian products by Wednesday, but he issued a last-minute delay, citing major progress in talks.
Canada's regional leaders had claimed that the US has been particularly irritated by one retaliatory measure: the removal of US alcohol and wine from off-licences.
Mr Carney on Wednesday asked the provinces to restock US alchohol. Some publicly agreed, but others voiced hesitance.
Quebec Premier Christine Frechette said she wanted to study the deal before agreeing to anything, while Manitoba's left-wing Premier Wab Kinew told reporters Mr Trump appeared "weak" and suggested Canada should "fight".
Ontario Premier Doug Ford, one of Mr Trump's most prominent critics during the trade war, has so far stayed quiet.
Mr Ford controls the Liquor Control Board of Ontario, one of the largest individual purchasers of US alcohol products.
Mr Carney has repeatedly told Canadians that relations with the US have been forever changed, regardless of what happens with an individual trade deal.
He says the country needs to diversify and reduce its reliance on the US, which currently accounts for roughly 70% of Canadian exports.
The US and Canada have also yet to agree on revisions to the North American free trade agreement, USMCA, which Mr Trump declined to renew last month.