US President Donald Trump has paused planned 50 percent tariffs on a wide range of Canadian goods for three days as Washington and Ottawa work to finalise a Trade agreement, easing immediate pressure on businesses and consumers on both sides of the border.
Trump announced the delay less than two hours before the new tariffs were due to take effect, saying the decision was based on the expectation that the two countries were close to reaching a deal. “I have paused the 50% Tariffs against Canada that were scheduled to kick in tomorrow morning for three days, based on the fact that Canada and the U.S.A., subject to the finalisation of documents, have a DEAL!” Trump said in a social media post.
The proposed tariffs were expected to affect nearly $20 billion of Canadian imports, including wine, dairy products, cement, clothing and hockey equipment. They would have come on top of existing US duties on Canadian steel, aluminium, automobiles and lumber.
Canadian Prime Minister Mark Carney said significant progress had been made but cautioned that negotiations were not complete. “Substantial progress has been made, although there is important work still to be done,” Carney said in a letter posted on X.
Trump and Carney spoke twice this week as negotiators worked to resolve differences over tariffs, automobiles, dairy access and Canadian restrictions on the sale of American alcohol. The US has been seeking greater access for American dairy products and the removal of retaliatory tariffs imposed by Canada, including restrictions on US alcohol sales introduced by several provinces following Trump’s earlier trade measures.
Canada, meanwhile, wants Washington to reduce or remove tariffs affecting key sectors of its Economy, particularly automobiles. According to Reuters, negotiators were discussing a proposal to reduce US tariffs on Canadian automobiles from 25 percent to 15 percent. However, the two sides remained divided over which vehicles would qualify for the lower rate, with Washington pushing for a greater share of American-made content.
The dispute over alcohol sales could prove difficult for Carney because liquor regulation is controlled by Canada’s provinces rather than the federal government. Ontario Premier Doug Ford, whose province has been particularly exposed to US auto tariffs, said he would consider lifting the restrictions if Canada secured a “fair deal”.
Trump also linked a possible trade agreement to the revival of the Keystone XL oil pipeline, a long-running project that would connect Alberta’s oil production to the United States and carry about 830,000 barrels of oil a day. “The great Keystone XL Pipeline, long ago killed by Sleepy Joe Biden, may be awoken from the grave!” Trump wrote.
The US Trade Representative’s office said a potential agreement would include “comprehensive market access for all American goods, economic security commitments, digital trade alignment” as well as measures to protect American workers and the US market.
The prospect of a deal has been welcomed by businesses that have warned higher tariffs would increase costs, disrupt supply chains and weaken economic activity across both countries. The US Chamber of Commerce said higher tariffs would “damage both economies, drive up costs for US families, further disrupt critical supply chains” and put millions of American jobs linked to trade at risk.
The latest dispute reflects the wider deterioration in US-Canada trade relations since Trump returned to office in January 2025 and launched a broad tariff programme that has challenged decades of relatively open trade between the two neighbours. The three-day extension gives negotiators additional time to resolve the remaining differences, but the outcome will depend on whether Washington and Ottawa can turn the progress reported by both sides into a final agreement.
