Donald Trump has said he reached an agreement with Canada as he paused the introduction of a fresh volley of tariffs worth billions of dollars on America’s second-largest trading partner for three days.
The US president wrote on Truth Social late on Tuesday that he had postponed the 50 per cent tariffs, which were set to kick in on Wednesday, “based on the fact that Canada and the U.S.A., subject to the finalization of documents, have a DEAL”.
“The great Keystone XL Pipeline, long ago killed by Sleepy Joe Biden, may be awoken from the grave,” Trump wrote, referring to a proposed oil project, hours before a midnight deadline when levies on $20 billion (€17.2 billion) worth of goods were set to go into effect.
The last-minute reprieve will ease tensions between the trading partners after Trump threatened last month to impose 50 per cent tariffs on a range of Canadian goods, including cement and hockey sticks.
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Canada’s prime minister Mark Carney confirmed the US had postponed the 50 per cent tariffs until the end of Friday.
“Over the last number of weeks, Canada has engaged in intensive discussions with the US to address outstanding trade issues and deliver greater certainty and real benefits for Canadian businesses, workers, farmers, and families,” he said.
“Substantial progress has been made, although there is important work still to be done.”
The Trump administration has accused Canada of discriminating against US businesses, citing the dairy industry and government procurement. It has also demanded that Canada resume sales of American wine and spirits, which were pulled from shelves in retaliation for Trump’s earlier duties.
“Canada has expressed a commitment to remove the discrimination,” the White House said in a statement late on Tuesday. “Because of the status of these negotiations, the public interests favour suspending for a period of three days.”
US trade representative Jamieson Greer said: “The deal will include comprehensive market access for all American goods, economic security commitments, digital trade alignment, and many important provisions that will continue to protect our market and American workers, along with our Canadian partners.”
Trump’s latest threat of 50 per cent levies sparked weeks of crunch talks in which Canada offered targeted concessions and pushed for the US to lift existing levies on industries including cars, steel and lumber.
Potential failure posed a serious threat to Canada’s economy, which has been battered by Trump’s volatile tariff regime, as well as a political challenge for Carney.
“Let’s be clear, the tariff delay provides relief on both sides of the border,” said Candace Laing, president of the Canadian Chamber of Commerce. “Businesses may not be closing up shop with this news, but an extension doesn’t bring the certainty that a signed interim deal would.”
Canadian business leaders have warned of the impact of the new volley of 50 per cent tariffs on hundreds of products. Prolonged duties have put financial strain on the country’s car industry, leading to factory closures and job losses.
“US tariffs raise the cost of domestic manufacturing, increase prices, reduce exports and make the industry less competitive,” said Brian Kingston, president of the Canadian Vehicle Manufacturers’ Association.
Trump issued the threat using powers under Section 338 of the Tariff Act of 1930, which allows the administration to retaliate against discriminatory trade practices by other countries.
The president has had to seek new legal tools to pursue his tariff policies after the US supreme court struck down the emergency powers he had used to impose sweeping global levies.
The US and Canada last year also raised the prospect of reviving the Keystone XL oil pipeline as part of a grand bargain to ease Trump’s tariffs on steel and aluminium.
The pipeline was proposed more than 15 years ago to transport about 830,000 barrels a day (b/d) of heavy crude from Alberta to refineries on the US Gulf Coast.
It was shut down under then-president Barack Obama in 2015 before Trump relaunched it in 2017. Joe Biden scrapped the project in June 2021 on environmental grounds.
Canada supplies more than 4 million b/d of crude to the US, accounting for about 60 per cent of total US crude imports. – The Financial Times
