Donald Trump says deal reached with Canada and pauses tariffs
Last-minute reprieve follows ‘intense’ talks with Mark Carney to avert 50% levies on billions of dollars in goods
Donald Trump has said he reached an agreement with Canada as he paused the introduction of a fresh volley of tariffs worth billions of dollars on America’s second-largest trading partner for three days.
The US president wrote on Truth Social late on Tuesday that he had postponed the 50 per cent tariffs, which were set to kick in on Wednesday, “based on the fact that Canada and the U.S.A., subject to the finalization of documents, have a DEAL”.
“The great Keystone XL Pipeline, long ago killed by Sleepy Joe Biden, may be awoken from the grave,” Trump wrote, referring to a proposed oil project, hours before a midnight deadline when levies on $20bn worth of goods were set to go into effect.
The last-minute reprieve will ease tensions between the trading partners after Trump last month threatened 50 per cent tariffs on a range of Canadian goods, including cement and hockey sticks.
The Trump administration has accused Canada of discriminating against US businesses, citing the dairy industry and government procurement. It has also demanded that Canada resume sales of American wine and spirits, which were pulled from shelves in retaliation for Trump’s earlier tariffs.
In a statement released late on Tuesday, the White House said Canada was “discriminating against” the US by banning the sale of American alcoholic beverages and cheese, and through its motor vehicle tariff scheme.
“Canada has expressed a commitment to remove the discrimination,” the White House said. “Because of the status of these negotiations, the public interests favor suspending for a period of 3 days.”
Trump’s latest threat of 50 per cent levies sparked weeks of crunch talks in which Canada offered targeted concessions and pushed for the US to lift existing levies on industries including cars, steel and lumber.
Canadian leader Mark Carney spoke to Trump twice this week during the final stages of what the prime minister called “intense and delicate” negotiations.
The potential failure of the negotiations posed a serious threat to Canada’s economy, which has been battered by ever-changing US trade measures, as well as a political challenge for Carney, who has promised to protect the country from Trump’s volatile tariff regime.
US trade representative Jamieson Greer said: “The deal will include comprehensive market access for all American goods, economic security commitments, digital trade alignment, and many important provisions that will continue to protect our market and American workers, along with our Canadian partners.”
“Let’s be clear, the tariff delay provides relief on both sides of the border,” said Candace Laing, president of the Canadian Chamber of Commerce. “Businesses may not be closing up shop with this news, but an extension doesn’t bring the certainty that a signed interim deal would.”
Canadian business leaders have warned of the impact of the new volley of 50 per cent tariffs on hundreds of products. Prolonged duties have caused financial strain to Canada’s car industry, leading to factory closures and job losses.
“US tariffs raise the cost of domestic manufacturing, increase prices, reduce exports and make the industry less competitive,” said Brian Kingston, president of the Canadian Vehicle Manufacturers’ Association.
Trump issued the threat using powers under Section 338 of the Tariff Act of 1930, which allows the administration to retaliate against discriminatory trade practices by other countries.
The president has had to seek new legal tools to pursue his tariff policies after the US Supreme Court struck down the emergency powers he had used to impose sweeping global levies.
The US and Canada last year also raised the prospect of reviving the Keystone XL oil pipeline as part of a grand bargain to ease Trump’s tariffs on steel and aluminium.
The pipeline was proposed more than 15 years ago to transport about 830,000 barrels a day of heavy crude from the western Canadian province of Alberta to refineries on the US Gulf Coast.
But it was shut under then-president Barack Obama in 2015, before Trump relaunched it in 2017 during his first term. Joe Biden scrapped the project in June 2021 on environmental grounds.
Canada supplies more than 4mn b/d of crude to the US, accounting for about 60 per cent of total US crude imports.