Key facts
- President Trump announced a three-day pause on 50% tariffs on Canadian goods.
- The tariffs were scheduled to take effect on August 19.
- A deal has been reached between the U.S. and Canada, though further work is needed.
- Key issues in the trade dispute include U.S. auto tariffs, Canadian dairy laws, and alcohol bans.
- A final trade deal may permit the revival of the Keystone XL pipeline.
President Donald Trump announced a three-day delay on imposing 50% tariffs on a wide array of Canadian goods, stating that the U.S. and Canada have reached a deal subject to finalization of documents. The pause came less than two hours before the tariffs, which would have affected nearly $20 billion of Canadian imports, were set to go into effect.
The two countries had been at an impasse on several issues, including U.S. tariffs on autos and many Canadian provinces banning American liquor sales. Trump and Prime Minister Mark Carney spoke twice this week, and trade negotiators have been engaged in intense talks since July, after Trump threatened the new levy with a deadline of August 19.
In his social media post, Trump also indicated that a final trade deal could allow the revival of the Keystone XL pipeline, which would carry 830,000 barrels of oil a day. The extension of the tariff deadline was welcomed by Canadian negotiators and businesses on both sides of the border, who had warned that the tariffs would be harmful.
Tensions had mounted between the two major trading partners since Trump returned to office, leading to a wide-ranging global program of tariffs. The threatened tariffs were to be applied on imports including wine, dairy, cement, clothing, and hockey equipment, in addition to existing tariffs on steel, aluminum, autos, and lumber.
Canada sought a reduction in U.S. auto tariffs, while the U.S. asked for concessions such as removing retaliatory tariffs on American autos and adjusting dairy quotas. Negotiators were discussing a deal to reduce U.S. auto tariffs from 25% to 15%, but agreement on eligible vehicles remained elusive. Ontario Premier Doug Ford stated he was open to lifting the liquor ban only if a "fair deal" was reached. The U.S. Chamber of Commerce had urged for a deal, warning that higher tariffs would damage both economies and disrupt supply chains.