President Donald Trump paused plans to impose 50 percent tariffs on roughly $20 billion in Canadian goods Tuesday, announcing that the United States and Canada had reached a last-minute agreement just hours before the new duties were scheduled 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!” Trump wrote on Truth Social.
The tariffs had been scheduled to take effect at 12:01 a.m. Wednesday and would have covered a range of Canadian products, including hockey sticks and tongue depressors. The three-day pause gives negotiators additional time to finalize an agreement and averts, at least temporarily, another escalation in the trade dispute between the two countries.
A White House proclamation said Canada had agreed to roll back measures the Trump administration considers discriminatory toward U.S. alcohol, dairy and motor vehicle exports, noted NPR. The Canadian government did not immediately confirm those specific commitments.
Canadian Prime Minister Mark Carney said the two sides had made “substantial progress” but still had work to do. His office confirmed that Canada agreed to the three-day pause while negotiations continue. Trump and Carney spoke by phone twice over the preceding two days, including Tuesday afternoon, according to the prime minister’s office.
The stakes are significant for both countries. The United States and Canada exchanged about $880 billion in goods and services last year, while nearly 72 percent of Canadian goods exports went to the United States.
The tariffs also threatened to raise costs for American companies importing Canadian products. Tariffs are collected from U.S. importers, which can absorb the added expense or pass some or all of it along to customers.
Ryan Majerus, a partner at King & Spalding and former U.S. trade official, told NPR before the pause was announced that both governments had reason to avoid another round of tariffs.
“I don’t think either side really wants these tariffs to come into effect. There’s a pretty strong push on both sides to find an off-ramp here.”
Canadian Chamber of Commerce President and CEO Candace Laing welcomed the reprieve but said businesses still need a lasting resolution.
“This limbo state is not anyone’s preferred outcome,” she said, calling on the two governments to reach a final agreement quickly.
Trump had threatened the tariffs under Section 338 of the Tariff Act of 1930, a rarely invoked Depression-era provision allowing the president to impose duties of up to 50 percent on imports from countries found to discriminate against U.S. commerce. The provision does not require a formal investigation or impose a specific time limit.
The products targeted by the threatened tariffs account for about 5 percent of Canadian exports to the United States.
The dispute comes as Washington, Ottawa and Mexico renegotiate the U.S.-Mexico-Canada Agreement, the North American trade pact negotiated during Trump’s first term. The administration’s Section 338 tariff threat has provided Washington with additional leverage in those negotiations.
Canada had warned that it would impose retaliatory tariffs on U.S. products if Trump followed through with the new duties. For now, both sides have three more days to turn the tentative agreement into a final deal.
