Donald Trump has temporarily paused 50% tariffs on $20 billion in Canadian imports after the two countries struck a last-minute deal just hours before the measures were set to take effect. The move naturally creates room for further talks and sidesteps, at least for now, added tension between the longtime allies.
“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 posted on Truth Social less than two hours before deadline.
Alluding to how the Biden administration (and the Obama White House) blocked the Keystone XL pipeline, an oil pipeline that could connect Canada’s Alberta to the US, Trump reiterated in his post that a final trade deal between the two sides could ultimately revive the project.
More about US-Canada tariff discussions
The tariffs would have covered roughly 5% of Canada’s annual exports to the United States, from hockey sticks to tongue depressors. The political fallout, however, was expected to outweigh the economic effects. Canada, which is the US’ second-largest trading partner after Mexico, had warned it would respond with its own levies, heightening a trade dispute between partners that exchanged $880 billion in goods and services last year.
The US Chamber of Commerce also urged for a deal to be sealed, stating that “higher tariffs would damage both economies, drive up costs for US families, further disrupt critical supply chains, and risk the 13 million American jobs that depend on trade under the US-Mexico-Canada Trade Agreement.”
While initially announcing the tariffs, the Trump administratio accused Canada of taking “unreasonable, unequal, and discriminatory action” by imposing duties on certain American goods. The pre-existing terms between the two sides has seen the Trump government impose a 10% on goods from, and yet, most Canadian imports are exempt from them given their compliance with the US-Mexico-Canada agreement.
On Monday, Canadian PM Mark Carney refrained from speaking publicly about the “intense and delicate” negotiations with the US. Ultimately, both he and Trump spoke twice by phone in two days. Carney’s office further revealed that one of those calls, which sealed the last-minute onto a deal, was held on Tuesday afternoon.
As part of the back and forth between the two countries, the US is counting on Canada to remove its remaining retaliatory tariffs on American autos and adjust dairy quotas so that US cheese producers could have better access. The White House has also asked that the ban on US alcohol sales be lifted. Most Canadian provinces imposed it last year in retaliation to Trump’s tariffs.
According to a Reuters report citing anonymous sources, the negotiations in the final hours before the Wednesday deadline involved discussions about potentially reducing US tariffs on Canadian autos from 25% to 15%.