The United States and Canada reached a last-minute deal on Tuesday to delay President Donald Trump’s planned 50% tariffs on $20 billion worth of Canadian imports, giving the two countries more time to negotiate a broader trade agreement.
Trump was set to impose the tariffs from 12.01am but announced on social media that he had paused them after the two sides reached what he described as a “DEAL”, subject to finalising the documents.
“I have paused the 50% Tariffs against Canada, that were scheduled to kick in tomorrow morning for a three day period, based on the fact that Canada and the USA, subject to the finalization of documents, have a DEAL!” Trump said on Truth Social.
He also suggested that the proposed Keystone XL pipeline, which was cancelled during Joe Biden’s presidency, could be revived.
The tariffs would have affected around 5% of Canadian exports to the United States, covering products ranging from hockey sticks to tongue depressors. Canada had threatened retaliatory measures, raising the prospect of another escalation between two of the world’s closest trading partners.
The latest dispute comes amid already strained US-Canada relations under Trump, who has repeatedly suggested that Canada should become the 51st US state.
The two countries exchanged around $880 billion worth of goods and services last year, while nearly 330,000 people and $2 billion worth of goods cross their shared border every day.
Canada is particularly vulnerable to trade disruption, with nearly 72% of its goods exports going to the US last year. Washington could also face higher prices if American importers pass the additional tariff costs on to consumers.
What was at stake
Trump had invoked Section 338 of the US Tariff Act of 1930 to impose tariffs of up to 50% on Canadian goods, accusing Ottawa of discriminating against US exports, including automobiles, alcohol and cheese. The provision has never previously been used.
Washington has also been seeking greater Canadian purchases of US military equipment, participation in its “Golden Dome” missile-defence system and access to critical minerals.
Ottawa, meanwhile, has been pushing for relief from existing US tariffs on Canadian steel, aluminium and softwood lumber.
The negotiations are taking place alongside talks over the United States-Mexico-Canada Agreement (USMCA), the North American trade pact that governs trade between the three countries.
The temporary pause in the tariffs gives Washington and Ottawa additional time to negotiate a broader settlement, but the underlying trade disputes remain unresolved.
