US President Donald Trump has paused the planned rollout of new tariffs on Canadian goods as Washington and Ottawa move closer to a trade agreement. Trump announced a three-day delay in the proposed 50-percent duties shortly before a midnight deadline. The decision came after weeks of intensive negotiations between the United States and Canada.
Trump said the delay reflected progress toward a potential agreement between the two countries.
“Based on the fact that Canada and the U.S.A., subject to the finalization of documents, have a DEAL!” Trump wrote on his Truth Social platform.
However, Canadian Prime Minister Mark Carney offered a more cautious assessment of the negotiations.
“Substantial progress has been made” towards a comprehensive trade deal, but “there is important work still to be done.”
US and Canada Work Toward New Trade Agreement
Washington and Ottawa have been negotiating changes to the existing United States-Canada-Mexico Agreement (USMCA). Trump signed and praised the trade agreement during his first term. However, he has since argued that the pact requires changes. The US Trade Representative’s office said the proposed agreement would cover several major areas.
It would include “comprehensive market access for all American goods, economic security commitments, digital trade alignment” and other provisions.
Trump’s proclamation also linked the tariff suspension to Canada’s willingness to address US concerns.
The document said “Canada has expressed a commitment to remove the discriminations or unreasonable and unequal impositions at issue.”
Meanwhile, Carney said the potential agreement could provide greater certainty for Canadian businesses and workers.
He said the deal would “address outstanding trade issues and deliver greater certainty and real benefits for Canadian businesses, workers, farmers and families.”
Proposed Tariffs Target Canadian Products
Trump ordered the 50-percent tariffs last month. The White House accused Canada of imposing “discriminatory treatment” on US alcohol, automobile and dairy products. The proposed duties would affect products including wine, hockey sticks and cement.
Oxford Economics estimates that the tariffs would cover around 5.5 percent of Canada’s exports to the United States. That trade represents approximately $20 billion in goods.
The research firm described the overall economic risk to Canada as “modest.” However, it warned that Canada’s manufacturing sector could face a much stronger impact.
Central Canada’s manufacturing industry could face particular pressure under the proposed measures. Canadian negotiators have therefore continued discussions in Washington to prevent the new tariffs.
They are also seeking relief from existing US sector-specific duties affecting Canadian industries. These measures have already affected Canada’s automobile, steel, lumber and aluminum sectors.
Canada Offers Possible Trade Concessions
Canadian officials have reportedly considered concessions during the negotiations. One proposal involves encouraging provinces to restore US alcohol and wine products to store shelves.
The move could address one of Washington’s concerns over access for American products. Trump also raised the possibility of reviving the Keystone XL pipeline.
“The great Keystone XL Pipeline, long ago killed by Sleepy Joe Biden, may be awoken from the grave!”
Trump has previously supported bringing the controversial pipeline project back.
The project faced strong opposition from environmental activists and was blocked during Joe Biden’s presidency.
Trade Talks Face Political Pressure
The latest developments come as both governments face pressure to secure favourable trade terms. Former US commerce official Christopher Padilla said negotiations often continue until the final deadline.
“It’s not unusual for a trade negotiation to go right up to the deadline,” Padilla said.
He suggested that the Trump administration used the tariff threat to encourage early concessions from Canada.
Oxford Economics expects several Canadian manufacturing sectors to face the greatest impact if the tariffs take effect.
These include cement, paper, printing, wood, clothing and electronic equipment.
The proposed duties also face legal uncertainty. The US Supreme Court struck down many of Trump’s global tariffs earlier this year.
As a result, Trump turned to a relatively untested legal provision for the proposed Canada-specific duties.
The tariffs would exclude Canadian energy, potash and products already facing sector-specific duties.
However, they could still affect goods covered by the USMCA. US trade envoy Jamieson Greer previously said the measures were designed to “hold Canada accountable” for its actions.
Greer also pointed to Canada’s restrictions on US alcohol products and changes affecting dairy imports.
Provinces have removed some US alcohol products from shelves, while Canada has expanded market access for dairy products from the European Union.
For now, the three-day pause gives both sides additional time to finalise their negotiations.
However, the outcome will depend on whether Washington and Ottawa can resolve their remaining trade disputes before the new deadline.
