US President Donald Trump has paused a planned 50% tariff on nearly $20 billion worth of Canadian imports for three days, saying the United States and Canada are close to finalising a trade agreement.
Trump announced the delay on social media less than two hours before the new tariffs were scheduled to take effect. “Canada and the U.S.A., subject to the finalization of documents, have a DEAL!” Trump said.
Canada-US Talks Make Progress Canadian Prime Minister Mark Carney confirmed that significant progress had been made, although he said important issues still needed to be resolved. Trump and Carney spoke twice during the week, while negotiators have been holding intensive discussions since July.
The proposed deal could cover:Greater market access for US goods in Canada Economic security commitments Digital trade cooperation Changes to tariffs on Canadian vehicles Greater access for US dairy products Removal of Canadian provincial restrictions on US alcohol Potentially the revival of the Keystone XL oil pipeline Trump said the Keystone XL project could be revived as part of the agreement. The proposed pipeline would connect Alberta’s oil production to the United States and has a planned capacity of about 830,000 barrels of oil per day.
Auto Tariffs Remain a Major Issue One of the biggest sticking points is the US tariff on Canadian automobiles.Reuters reported that negotiators were considering reducing the existing 25% US auto tariff to 15%, but disagreements remained over which vehicles would qualify. The US reportedly wants the lower tariff to apply only to vehicles containing a high proportion of American-made components.Canada is also seeking reductions in tariffs affecting key sectors including steel, aluminium, lumber and other goods.
Alcohol Ban Creates Another Challenge The US has asked Canada to remove restrictions on American alcohol sales that were introduced by several Canadian provinces in response to Trump’s tariffs. However, alcohol sales are controlled by provincial governments rather than Ottawa, meaning Carney will need the support of provincial premiers.
Ontario Premier Doug Ford said he would consider lifting the restrictions if Canada receives what he considers a “fair deal.” Businesses Welcome the Delay the three-day pause provides additional time for negotiators and prevents the immediate imposition of higher tariffs that businesses on both sides of the border had warned could increase costs and disrupt supply chains.
The US Chamber of Commerce also urged both countries to reach an agreement, warning that higher tariffs could hurt both economies and threaten millions of jobs dependent on trade under the US-Mexico-Canada Trade Agreement (USMCA). For now, the tariff increase has been delayed rather than permanently cancelled. The next three days will determine whether Washington and Ottawa can finalise the proposed agreement.
