Trump pauses 50% Canada tariffs after last-minute US-Canada trade deal

Trump delayed planned 50 per cent tariffs on Canadian imports after a late deal with Ottawa. The three-day pause averts immediate retaliation and keeps tense trade talks alive.

In Short

• Tariffs on products from hockey sticks to tongue depressors were imminent
• Canada had warned of retaliatory levies, risking wider damage to bilateral trade
• Carney said substantial progress was made, though key negotiations remain unfinished

US President Donald Trump on Tuesday said he was delaying the planned 50 per cent tariffs on USD 20 billion worth of Canadian imports after the two countries reached a last-minute deal less than two hours before the measures were due to take effect.

The three-day pause, announced by Trump on Truth Social, gives both sides more time for talks and avoids, for now, another escalation in already strained ties between the two allies. A White House proclamation said Canada had committed to remove measures the Trump administration considers discriminatory against US alcohol, dairy and motor vehicle exports, though Canada did not immediately confirm those commitments.

"I have paused the 50 per cent 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 finalisation of documents, have a DEAL!" Trump posted.

The tariffs had been due to come into force at 12.01 am Wednesday and would have applied to Canadian products ranging from hockey sticks to tongue depressors. Canada had threatened retaliatory levies if the new tariffs were imposed, deepening a trade dispute between the two countries, which exchanged USD 880 billion worth of goods and services last year.

Canadian Prime Minister Mark Carney said in a statement that "substantial progress" had been made, but added that important work remained. He confirmed that Canada had agreed to the three-day delay while negotiations continued. Carney and Trump spoke twice by phone over the past two days, including on Tuesday afternoon, Carney's office said.

Both sides had reasons to avoid the tariffs. Nearly 72 per cent of Canada's goods exports last year went to the United States. For the Trump administration, imposing a steep new tariff before November's midterm elections would also have carried political risk, as the duties are paid by US importers, who may try to pass on the cost through higher consumer prices at a time when voters are already unhappy with the cost of living.

Before the delay was announced, Ryan Majerus, a partner at King & Spalding and a former US trade official, said: "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 said the three-day delay offered some relief to businesses but did not provide the certainty of a signed interim agreement. "This limbo state is not anyone's preferred outcome," she said, urging negotiators to reach a deal quickly.

Trump's handling of Canada marks a sharp break from the traditionally cooperative relationship between the two countries. He has imposed tariffs on Canadian goods as part of his push to bring manufacturing back to the US and has repeatedly made comments about turning Canada into America's 51st state.

Tariffs have been central to Trump's second-term economic agenda. Last year, he imposed double-digit import taxes on almost every country, saying the long-running US trade deficit was a national emergency. In February, the Supreme Court ruled that he had exceeded his authority, struck down those tariffs and opened the way for the federal government to refund importers.

Trump has since looked for other legal grounds to impose tariffs. In Canada's case, he invoked Section 338 of the Tariff Act of 1930, a provision that allows the president to impose tariffs of up to 50 per cent on imports from countries seen as discriminating against US businesses. No investigation is required and there is no time limit on how long the tariffs can remain in place. The provision has never been used before.

The 1930 law is linked to the Smoot-Hawley tariffs, which are widely known for restricting global trade during the Great Depression. The US is also renegotiating the US-Mexico-Canada Agreement, the North American trade pact agreed during Trump's first term, and the threat of Section 338 tariffs gives Washington added leverage in seeking fresh concessions from Ottawa.

For now, the last-minute agreement has put the threatened tariffs on hold, given negotiators a short window to continue talks and prevented an immediate widening of the trade dispute between the US and Canada.

With PTI Inputs

- Ends