Canada Tariff Shock Averted? Trump Delays 50% Duties After Trade Deal Claim

US President Donald Trump on Wednesday announced a temporary suspension of the 50% tariffs on Canadian goods, saying Washington and Ottawa had reached a preliminary agreement.

The tariffs were scheduled to take effect on Thursday. Trump said the pause would give both sides time to finalise the necessary documents.

“Canada and the U.S.A., subject to the finalization of documents, have a deal,” Trump said in a post on Truth Social.

He also revived the possibility of restarting the Keystone XL pipeline, a project cancelled by former US President Joe Biden.

US-Canada Deal Still Needs Finalisation

The US Trade Representative said the proposed agreement would include broader market access for American goods, economic security commitments and alignment on digital trade.

The Canadian Prime Minister’s Office confirmed that the two countries had made “substantial progress” but cautioned that negotiations were not yet complete.

As discussions continue, Washington agreed to postpone the 50% tariff on a range of Canadian products under Section 338 of the US Tariff Act of 1930 until the end of August 21.

The Canadian government said it would continue working towards a stronger and more competitive domestic economy.

Last-Minute Negotiations

The tariff deadline had triggered intense negotiations between the neighbouring countries. Trump had threatened to impose 50% duties on around $20 billion worth of Canadian products, covering everything from hockey sticks to medical items, if an agreement was not reached.

Canadian Prime Minister Mark Carney and Trump spoke twice over the preceding two days, including a call on Tuesday.

Carney had described the discussions as intense and delicate, declining to disclose details while negotiations were underway.

The two governments have long-standing trade disputes involving issues such as Canadian softwood lumber and US access to Canada's protected dairy market.

Despite those disagreements, the two economies remain deeply integrated.

US-Canada Trade Ties

The two countries share a 5,525-mile border, which remains largely undefended. Around 330,000 people and goods worth roughly $2 billion cross the border every day, highlighting the scale of their economic relationship. Around 800,000 Canadians also live in the US.

Trump has repeatedly used tariffs as a tool to encourage manufacturing to move back to the US. He has also made controversial remarks about Canada potentially becoming America's 51st state.

Trump’s Wider Tariff Push

The temporary Canada tariff pause comes amid Trump's broader effort to reshape US trade policy through import duties.

Tariffs have been a central component of his second-term economic strategy. Trump has argued that import duties can reduce America's trade deficit and encourage domestic production.

However, his earlier tariff programme suffered a major setback when the US Supreme Court ruled in February that he had exceeded his legal authority in imposing those duties.

The ruling also opened the possibility of refunds to importers affected by the tariffs.

The administration subsequently sought alternative legal routes to impose new trade barriers.

Last month, Washington imposed tariffs ranging from 10% to 12.5% on 59 countries and the European Union, representing almost all US imports.

The administration justified the measures partly on claims that trading partners were failing to adequately prevent imports linked to forced labour.

For now, the Canada tariff deadline has been pushed back, giving Washington and Ottawa additional time to convert their preliminary understanding into a formal agreement.