US, Canada Reach Last-Minute Deal to Delay 50% Tariffs
President Donald Trump announced Tuesday that the United States and Canada have reached a last-minute agreement to delay the implementation of 50% tariffs on $20 billion worth of Canadian imports, averting a potential trade escalation between the two neighbors less than two hours before the duties were set to take effect.
“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 posted on Truth Social, according to AP News.
Background: An Unprecedented Trade Weapon
The tariffs, which would have hit Canadian products ranging from hockey sticks to tongue depressors, were invoked under Section 338 of the Tariff Act of 1930 — the first time the Great Depression-era provision has ever been used. Trump signed three separate proclamations on July 20 targeting Canadian motor vehicles, alcoholic beverages, and dairy, citing what the administration considers discriminatory treatment of U.S. exports.
According to USTR Ambassador Jamieson Greer’s statement, Canada has “taken U.S. alcohol products off Canadian shelves, given better market access to dairy products from the European Union, and has put a cap on U.S. vehicle exports to Canada.” The tariffs apply regardless of whether goods qualify for duty-free treatment under the USMCA, as Holland & Knight’s legal analysis notes.
The Last-Minute Push
The breakthrough came after days of intense negotiations. Canadian Prime Minister Mark Carney and Trump spoke twice by phone in the past two days, including a call Tuesday afternoon. Canadian negotiators, led by Canada-U.S. Trade Minister Dominic LeBlanc, had spent the weekend in Washington meeting with USTR officials.
Carney confirmed the three-day delay in a statement, saying “substantial progress” had been made but that “important work still to be done” remained. Greer posted on social media that the pending deal would 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.”
Stakes on Both Sides
Both countries had significant reasons to step back from the brink. Nearly 72% of Canada’s goods exports last year went to the United States, and the two countries sold each other $880 billion worth of goods and services annually, as NPR reported.
For the Trump administration, imposing hefty new tariffs ahead of November’s midterm elections carried political risk, with U.S. voters already frustrated by the high cost of living. Canada had also threatened retaliation with levies of its own.
“I don’t think either side really wants these tariffs to come into effect,” Ryan Majerus, a partner at King & Spalding and a former U.S. trade official, said before the delay was announced. “There’s a pretty strong push on both sides to find an off-ramp here.”
Canadian Chamber of Commerce President and CEO Candace Laing offered cautious optimism, saying the delay “doesn’t bring the certainty that a signed interim deal would.” She added: “This limbo state is not anyone’s preferred outcome. Time is of the essence.”
Keystone XL Hint
In the same social media post, Trump hinted that the controversial Keystone XL Pipeline project “may be awoken from the grave,” reviving a project killed by President Joe Biden in 2021 that would transport 830,000 barrels of crude oil daily from Alberta to Nebraska. As The Guardian reported, the pipeline has been a flashpoint in U.S.-Canada relations amid opposition from landowners, Native American tribes, and environmentalists.
Andreas Schotter, a professor of international business at Ivey Business School, suggested the pipeline’s inclusion in negotiations was about more than oil transport. “It was President Biden who actually stopped it, and this, among many things, pushed the loudest of the multitude of big red ego buttons with President Trump,” Schotter told Al Jazeera.
What’s Next
The new deadline for a final deal is August 22. Negotiators face complex issues including provincial bans on U.S. alcohol, Canada’s dairy supply management system, and auto tariff rates. The political climate remains fraught, with Canadian public sentiment having soured on the U.S. — 69% of Canadians said they would not buy U.S. alcohol even if bans were lifted, according to a Nanos Research poll cited by CP24.
“Let’s see if we really get to a deal by Friday or if we are back at a Groundhog Day moment,” Schotter said.
Stewart Prest, a lecturer of political science at the University of British Columbia, noted the domestic pressures on Carney: “The majority of Canadians want to see our sovereignty defended, and are not interested in trade peace at any price.”
As negotiators race toward Friday’s deadline, the fundamental question remains whether the two sides can convert this temporary reprieve into a lasting agreement — or whether the tariff threat will simply return in another form.