US and Canada reach tariff truce, Trump announces three-day pause
President Trump announces a three-day pause on new 50% tariffs on Canadian goods, citing a deal, while floating the revival of the Keystone XL pipeline.
Washington and Ottawa have stepped back from a trade cliff-edge. Late Tuesday night, US President Donald Trump announced a three-day pause on new 50% tariffs that were set to hit Canadian goods on Wednesday, saying the two countries had reached an agreement.
In a post on Truth Social, Trump said the pause was based on the fact that Canada and the USA, subject to finalizing documents, have a deal. There was no immediate confirmation from the Canadian government. Trump also floated the idea of reviving the Keystone XL pipeline, a project cancelled by former President Joe Biden in 2021, saying it "may be awoken from the grave," though he offered no details.
The announcement came after Trump spoke with Canadian Prime Minister Mark Carney on Tuesday afternoon, their second conversation this week, and after weeks of intense, opaque negotiations. The new tariffs would have covered roughly $20 billion worth of imports and applied regardless of whether Canadian goods qualified for preferential treatment under the USMCA trade agreement.
Industry sources said existing US auto tariffs were a major sticking point. Negotiators have discussed cutting Section 232 tariffs on Canadian vehicles to 15% from 25%, with further reductions tied to the amount of US content in each vehicle. A key dispute was how to calculate those deductions: Washington wanted only US-produced content counted, while Canada pushed for all North American content, including Canadian and Mexican parts.
Business groups warned of significant fallout. Candace Laing, CEO of the Canadian Chamber of Commerce, said billions of dollars in goods per year that were previously unaffected were now at risk. She noted businesses had been holding off on hiring and investment in Canada for over a year.
Canadian officials, including trade minister Dominic LeBlanc and chief negotiator Janice Charette, have been in Washington since last week. On Monday, they met for nearly two hours with US Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick. Greer has cited Canadian retaliatory tariffs, provincial refusals to stock US liquor, and Canada's dairy supply management system among US grievances.
The details of the deal touted by Trump remain unclear. A Canadian government source had said last week that all options remained on the table if the tariffs took effect, including government support for affected industries and a possible suspension of bilateral trade talks.