Trump Pauses New Tariffs On Canada, Cites Deal Progress

Washington (GNP): United States President Donald Trump has announced a three-day pause on new 50 percent tariffs against Canada that were set to take effect at midnight, saying the two countries have reached a deal subject to the finalization of documents.

The announcement came less than two hours before the levy, which would have covered nearly 20 billion dollars worth of Canadian imports, was due to take effect.

Trump and Canadian Prime Minister Mark Carney spoke twice this week as trade negotiators from both sides engaged in intense talks since July, following the US president’s earlier threat to impose the new tariffs by an August 19 deadline. Roughly an hour after Trump’s announcement, Carney issued a statement acknowledging that substantial progress has been made, while noting that important work still remains to finalize the agreement.

The tariffs at the center of the dispute would have applied to a broad range of Canadian goods, including wine, dairy, cement, clothing and hockey equipment, in addition to existing US tariffs already in place on Canadian steel, aluminium, autos and lumber.

The measures would have applied regardless of whether Canadian goods qualified for preferential treatment under the US-Mexico-Canada trade agreement, which has otherwise shielded much of Canadian industry from earlier rounds of tariffs.

Central to the negotiations has been the question of US tariffs on Canadian autos, alongside provincial bans on American liquor sales imposed by most Canadian provinces in retaliation for earlier tariffs.

Washington has been pressing Canada to remove its remaining retaliatory auto tariffs, adjust dairy quotas to allow greater access for American cheese producers, and lift the alcohol sales ban. Canada, in turn, has sought reductions or removal of US tariffs on its dairy, wine, cement, clothing and other key export sectors.

In the hours leading up to the deadline, negotiators had reportedly been discussing a reduction in US tariffs on Canadian autos from 25 percent to 15 percent, with further reductions tied to the amount of US-produced content in each vehicle. The two sides remained divided over how that content should be calculated, with Washington pushing to count only US-produced content while Canada argued for counting all North American content, including Canadian and Mexican parts.

The US Commerce Department had separately released new rules earlier in the week for automakers exporting from Canada and Mexico, reducing the requirement to certify US content levels for tariff deductions to once annually instead of twice. Automakers must recertify vehicles’ American content by September 30 to qualify for deductions under the new annual cycle, which begins December 1.

According to the Office of the US Trade Representative, the deal under discussion will include comprehensive market access for American goods, economic security commitments and digital trade alignment, along with provisions intended to protect both American and Canadian workers.

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Trump additionally said in his announcement that a final agreement could pave the way for reviving the Keystone XL pipeline, a long-stalled project intended to connect Alberta to the United States that was blocked during both the Obama and Biden administrations following years of opposition from environmental and indigenous groups.

Carney will need support from Canada’s provincial premiers to reverse the alcohol sales ban, since liquor sales fall under provincial rather than federal jurisdiction. Ontario Premier Doug Ford, whose province has been among the hardest hit by US auto tariffs, has said he would be open to lifting the ban only if a fair deal is reached.

Trade groups on both sides of the border had urged a resolution before the deadline. The US Chamber of Commerce said in a statement that higher tariffs would damage both economies, raise costs for American families and put millions of jobs tied to trade under the US-Mexico-Canada Trade Agreement at risk.

Says Prime Minister Mark Carney, “Substantial progress has been made, although there is important work still to be done”