Former President Donald Trump announced Tuesday that the United States and Canada have reached an agreement to pause 50% tariffs on $20 billion worth of Canadian products. The pause was set to take effect at 12:01 a.m. Wednesday, averting a deadline imposed by Trump.
"I have paused the 50% Tariffs against Canada, that were scheduled to kick in tomorrow morning for a three day period, based on the fact that Canada and the U.S.A., subject to the finalization of documents, have a DEAL!" Trump wrote on Truth Social. The tariffs, which would have affected approximately five percent of Canadian exports to the U.S., were threatened under Section 338 of the Tariff Act of 1930, a provision never before utilized. These tariffs were intended to pressure Canada over alleged discrimination against American autos, alcohol, and dairy products.
Trump also indicated that the deal could lead to the revival of the Keystone XL pipeline, which was partially constructed 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 stated.
The negotiations between Trump and Canadian Prime Minister Mark Carney were intense and delicate, with the two leaders speaking by phone multiple times in the days leading up to the deadline. Canada had previously threatened to retaliate with its own tariffs, which would have further complicated trade relations between the two nations, who exchanged $880 billion in goods and services last year. Canada is a significant export market for the U.S., with nearly 72 percent of its goods exports going to the United States in the previous year.
Trump has frequently made tariffs a central part of his economic platform. His administration previously imposed tariffs on various goods, citing the U.S. trade deficit as a national emergency. While the Supreme Court has since ruled against some of these broad tariff powers, Trump has sought alternative authorities, such as the 1930 Tariff Act, to implement new levies. These actions have marked a departure from the traditionally cooperative relationship between the U.S. and Canada, with Trump previously imposing tariffs on Canadian goods and making controversial remarks about annexation.
The White House stated that the threatened tariffs would have gone into effect in 30 days and covered products from wine to cement. The agreement to pause these tariffs could also influence ongoing renegotiations of the North American trade pact, the United States-Mexico-Canada Agreement (USMCA).