A suite of new tariffs on Canadian goods is paused for three days as talks between the US and Canadian teams continue, President Trump stated on Truth Social just hours before the tariffs were due to take effect.
“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 U.S.A., subject to the finalization of documents, have a DEAL!” the president wrote at 10:15 p.m. ET, before the midnight deadline.
A separate post from Trump’s trade representative said the deal will include market access for US goods, as well as other commitments, without providing additional details. Trump also referenced the Keystone XL pipeline as one reason for the last-minute tariff abatement, saying the project “may be awoken from the grave.”
A post from Canadian Prime Minister Mark Carney confirmed the pause, noting that “substantial progress has been made, although there is still important work to be done,” without providing details of his own.
Last month, Trump announced plans for 50% tariffs on a range of Canadian goods in response to what the US claims are discriminatory trade practices around automobiles, alcohol, and dairy products.
The new tariffs would have had limited immediate macroeconomic effects, as only about 5% of Canadian goods that the US imported last year would see the new duties. An analysis from Veda Partners calculated that the average tariff rate on Canadian exports would rise to 6.27% from 4.68%.
Yet success or failure in the now-extended talks could provide a major signal about the prospects for renewal of the US-Mexico-Canada Trade Agreement (USMCA).
A search for concessions on both sides
For weeks, the talks have centered on concessions, including the US potentially lessening duties on Canadian metals, lumber, and auto components in return for changes to Canadian market access to US goods, such as dairy products, and a reduction of retaliatory tariffs.
But the talks have been tense. US Trade Representative Jamieson Greer described Canada’s retaliation against US tariffs since Trump’s return to office in comments to reporters in Iowa last week as “the kind of things that China would do.” The Trump team often notes that only Canada and China have retaliated against Trump’s new tariffs during his second term.
One flash point: Canadian restrictions on US wines and liquors, though there is some optimism that a deal could return a significant number of US spirits to Canadian shelves, as no additional details on that issue were available Wednesday morning.
