Trump Pauses 50% Canada Tariffs for 3 Days After Last-Minute Trade Deal

US President Donald Trump has paused planned 50% tariffs on around $20 billion worth of Canadian imports after the United States and Canada reached a last-minute understanding shortly before the duties were due to take effect. The three-day pause gives both countries additional time to finalise the details of a broader trade arrangement.

The tariffs had been scheduled to take effect early Wednesday. Trump announced the delay on social media, saying the agreement was subject to the completion of the necessary documents.

The proposed duties would have affected a range of Canadian products, including items such as hockey equipment, liquor and other goods. Canada had threatened retaliatory measures if the tariffs went ahead, raising the prospect of another escalation in trade tensions between the two neighbouring countries.

The White House said Canada had agreed to address measures that the Trump administration considers discriminatory against US alcohol, dairy and motor vehicle exports. Canadian Prime Minister Mark Carney confirmed that substantial progress had been made but indicated that negotiations were still continuing.

Carney and Trump spoke twice over the preceding two days as officials from both countries worked towards an agreement before the tariff deadline.

The temporary pause provides some relief to businesses on both sides of the border, but it does not yet represent a fully finalised long-term trade agreement. Canadian business groups have continued to call for greater certainty as negotiations proceed.

The stakes are particularly high for Canada because the United States remains its dominant export market. A significant portion of Canadian goods exports are sent to the US, meaning higher tariffs could have affected exporters and increased costs across industries.

For the US administration, imposing the additional tariffs could also have created economic and political pressure because tariffs are paid by US importers, who may pass higher costs on to consumers.

The latest dispute is part of a broader deterioration in US-Canada trade relations under Trump's second term. Trump has repeatedly used tariffs as a central part of his economic policy and has also made controversial comments about Canada potentially becoming the 51st US state.

The proposed Canadian tariffs were based on Section 338 of the Tariff Act of 1930, an unusual provision that allows the US president to impose tariffs of up to 50% on imports from countries deemed to be discriminating against American businesses. The provision has not previously been used in this manner.

The use of the 1930 law comes after legal challenges to Trump's earlier tariff strategy. The administration has been exploring alternative legal mechanisms for imposing import duties after the US Supreme Court rejected an earlier basis for some of the president's tariffs.

The United States and Canada are also engaged in broader negotiations involving the US-Mexico-Canada Agreement, making the tariff threat an additional source of leverage for Washington as the two countries negotiate future trade arrangements.

Trump has also suggested that the controversial Keystone XL pipeline project could potentially be revived as part of the latest understanding, although details remain unclear.

For now, the three-day pause has prevented an immediate escalation and created a narrow window for Washington and Ottawa to continue negotiations. The next few days will determine whether the temporary reprieve develops into a broader trade agreement or whether the threatened tariffs return.