This breakdown happened in the midst of President Donald Trump's decision to levy stiff tariffs on steel and aluminum imports from a swath of American allies including Canada and Mexico, provoking likely retaliation and a possible all-out trade war.
The EU, Mexico and Canada had initially received exemptions when Trump declared global tariffs on imported metals, which started in March.
Canada, Mexico and the European Union were among the countries granted relief while the United States pursued negotiations to address the administration's concerns about the state of domestic steel and aluminum production.
Trudeau on Thursday said he felt the U.S., Mexico and Canada were on the verge of a renegotiated NAFTA that he described as a "win, win, win" before the talks stalled after the Pence phone call.
In March, Trump imposed a 25% tariff on steel imports and a 10% tariff on aluminium, but granted temporary exemptions to the EU, Canada, Mexico, Brazil, Australia and Argentina. "Business, defence and political leaders of all stripes and on both sides of our border understand this and we remain grateful for the strong support they have shown", he said.
Canadian and Mexican officials also threatened retaliatory responses but have as yet not indicated which USA products they will target.
Canada is imposing dollar-for-dollar tariff "countermeasures" on up to $16.6 billion worth of US imports in response to the American decision to make good on its threat of similar tariffs against Canadian-made steel and aluminum.
"We might see orders decline somewhat, but we have long-running relationships with most of our customers and we expect to reach a solution with most of them", Henrar said.
"We are deeply disappointed that the USA has chose to apply tariffs to steel and aluminum imports from the European Union on national security grounds", a government spokesman said.
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The Mexican peso dropped about 1 percent, hitting its weakest level against the dollar in almost 15 months, and the Canadian dollar shed about 0.6 percent.
The European Union said it would impose taxes on a number of U.S. imports, including Harley-Davidson motorcycles, Levi's jeans and Kentucky bourbon. Shares of Harley-Davidson Inc fell 2.2 percent and Brown-Forman Corp, maker of Early Times and other bourbon brands, lost 2.1 percent.
EU members have given broad support to a European Commission plan to set duties on €2.8bn ($3.4bn) of USA exports if Washington ends tariff exemptions. European Union officials have already floated the idea of 25-percent import tariffs on US -built products such as denim clothing, cigarettes, motorcycles, and consumables such as bourbon and peanut butter.
Procurement Minister Carla Qualtrough predicts "significant consequences" to Canada's defence industry as the US moves to impose tariffs on Canadian steel.
Australia is exempt from the tariffs after Prime Minister Malcolm Turnbull secured a deal to avoid the U.S. trade measures in March.
The tariffs take effect on July 1 and will last until the US ends its move.
The tariffs, which have increased friction with United States trading partners worldwide and prompted several challenges before the World Trade Organization, are aimed at allowing the USA steel and aluminium industries to increase their capacity utilization rates above 80% for the first time in years.
The consensus against tariffs is so overwhelming that over 1,100 economists, including 15 Nobel laureates, recently signed an open letter opposing tariffs on steel and aluminum imports.
Many trade experts argue the USA is hitting the wrong targets, as the worldwide glut of steel and aluminium is largely blamed on excess production in China. "Most of the time as I travel around I get confirmation these are high quality high value steel imports", he said, adding that in many cases these were products that couldn't be obtained in the U.S.