Canadian officials are scrambling to resolve a labour dispute that has ground the country’s freight railways to a halt, threatening dire economic consequences for business and consumers throughout Canada and the United States.

Canadian National Railway and Canadian Pacific Kansas City (CPKC) railroads both locked out their employees after a 12.01am EDT deadline to resolve a dispute with Teamsters Canada Rail Conference passed.

Talks resumed later in the day – as workers picketed outside and business groups urged the government to force the union into binding arbitration.

All of Canada’s freight handled by rail – worth more than $C1 billion($A1.1 billion) a day and adding up to more than 375 million tonnes of freight last year – stopped, as did rail shipments crossing the US border.

About 30,000 commuters in Canada were also affected because their trains use CPKC’s lines.

CPKC and CN’s trains continue operating in the US and Mexico.

Many companies in both countries and across all industries rely on railroads to deliver their raw materials and finished products, so without regular rail service they may have to cut back or even close.

Billions of dollars of goods move between Canada and the US via rail each month, according to the US Department of Transportation.

“They are now holding the Canadian economy hostage to try and pressure the Liberal government to impose final binding arbitration and take your rights away to free collective bargaining,” Paul Boucher, president of the Teamsters Canada Rail Conference, which represents about 10,000 engineers, conductors and dispatchers, said on social media platform X.

Locked-out rail workers marched back and forth across the road from CPKC’s head office in Calgary, Alberta, on Thursday.

A few passing cars honked their horns in support.

One man in a white truck yelled out his window, “Get back to work!”.

Both railroads said they would end the lockout if the union agrees to binding arbitration.

This post was originally published on Michael West.