Former President Donald Trump announced Tuesday that the United States and Canada have reached an agreement to pause 50 percent tariffs on approximately $20 billion worth of Canadian products. The deal, negotiated ahead of a Wednesday morning deadline set by Trump, averts a significant escalation in trade tensions between the two North American neighbors.
Trump stated on social media that the tariffs, which were scheduled to take effect at 12:01 a.m. Wednesday, would be paused for a three-day period, pending the finalization of documentation. He suggested that the agreement could lead to the revival of the Keystone XL pipeline, a project partially built before its permit was canceled by President Joe Biden on his first day in office in 2021, citing climate change concerns.
"The great Keystone XL Pipeline, long ago killed by Sleepy Joe Biden, may be awoken from the grave!" Trump posted on Truth Social.
The White House indicated that the threatened tariffs would have gone into effect in 30 days and would have impacted products ranging from wine to cement. Canadian Prime Minister Mark Carney's office confirmed that he and Trump had engaged in intensive negotiations over the preceding days, including multiple phone calls.
The trade dispute between the U.S. and Canada has historically involved disagreements over issues such as Canadian softwood lumber imports and U.S. access to Canada's dairy market. Trump's proposed tariffs, which would have affected about five percent of Canada's annual goods exports to the U.S., carried significant political weight given the deep economic ties between the countries. Canada had previously indicated it would retaliate with its own tariffs, potentially exacerbating a trade relationship that saw $880 billion in goods and services exchanged last year.
Trump's administration had previously threatened tariffs using Section 338 of the Tariff Act of 1930, a provision from the Great Depression era that allows for tariffs of up to 50 percent on imports from countries deemed to have discriminated against U.S. businesses. This section has not been previously utilized. The threat of these tariffs provides the U.S. with leverage as it renegotiates the North American trade pact, known as the U.S.-Mexico-Canada Agreement.