President Donald Trump has postponed threatened 50 percent tariffs on approximately $20 billion of Canadian goods, initially slated to take effect on Tuesday. The delay, announced via social media, is for a three-day period, with Trump stating that "Canada and the U.S.A., subject to the finalization of documents, have a DEAL!"
However, the extent of this agreement remains unclear. Canadian Prime Minister Mark Carney indicated that "substantial progress" has been made but stressed that "important work still to be done." Reports from The Wall Street Journal suggest that the U.S. might reduce existing tariffs on Canadian imports, including cars, steel, and aluminum, as part of a potential trade agreement. Trump has also indicated that a deal could lead to the revival of the Keystone XL oil pipeline project.
Despite the current delay, Trump retains the authority to impose new tariffs. While the Supreme Court recently limited his use of the International Emergency Economic Powers Act for imposing tariffs, he has other legislative tools at his disposal. He had been considering using a provision of the 1930 Smoot-Hawley Tariff Act for the threatened tariffs on Canadian goods, while other existing tariffs are enacted under different laws.
This trade negotiation comes as the United States, Mexico, and Canada are in the process of renegotiating the US-Mexico-Canada Agreement (USMCA), which Trump's administration finalized during his first term. Trump declined to renew the agreement last month, initiating new talks.